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makers β panel, around 40 % of firms consistently identify brexit as a major source of uncertainty, with less than 20 % viewing it as unimportant ( chart 5 ). bank staff analysis of the results points to a drag of between 3 and 4 % on nominal investment growth since the referendum as a result of this uncertainty. for more detail on these mechanisms, see the box on β factors affecting the prospects for long - term supply following the eu referendum β on pages 29 - 30 of the august inflation report. it is also possible that actual or anticipated changes in institutional arrangements due to brexit might affect the outlook for net migration and therefore population growth. specifically, it has been at the top of the list for two years, falling back for the first time to second place in q1, with its place at the top taken by weak uk demand. for more information on the decision maker panel, see bloom, n. et al ( 2017 ), β tracking the views of british businesses : evidence from the decision maker panel β, bank of england quarterly bulletin, 2017q2. the bank β s 2018q1 agents β summary of business conditions includes the latest published results from the survey. all speeches are available online at www. bankofengland. co. uk / speeches chart 5 : brexit as a source of uncertainty aug - sep 2016 feb - apr 2017 aug - oct 2017 feb - apr 2018 share of respondents ( per cent ) not important one of many sources 2 or 3 top sources top source of uncertainty on the demand side, while brexit did not lead to an immediate fall in gdp, it is nonetheless exerting a drag. in addition to its effects on investment, it has had a significant impact on real household incomes and therefore on consumption. the main vehicle for this impact has been the fall in the exchange rate, which remains some 15 % below its pre - referendum peak. the rise in import prices caused by sterling β s depreciation has had a material and persistent effect on incomes : real household income has only risen by 0. 2 % in the seven quarters since the referendum, compared with averaged growth of over 1Β½ % per year in the five years prior to it ( chart 6 ). given that slowing in real income growth, you could argue that it β s surprising that households haven β t adjusted consumption even more. consumption growth has certainly slowed : it has averaged around 0. 3 % per quarter since the referendum, compared to | i have described. a critical assessment of why trust in public institutions fell is important, but questioning central bank independence is not the right approach β subjecting central banks to political influence is unlikely to make them more trusted. we know the economic argument β empirical evidence shows that political influence is more likely to lead to short - termism and make the central bank less effective in preserving price stability. but there is also a political argument β political influence does not necessarily mean stronger legitimacy, precisely because it is likely to arouse the suspicion that the central bank is politically motivated and may therefore deviate from its mandate for political reasons. so i would argue that independence does not weaken accountability, it strengthens it. accountability, in turn, ensures that independence does not lead to arbitrariness and that the 1 / 4 bis central bankers'speeches mandate is fulfilled. so, proper accountability arrangements strengthen the case for independence. and they reinforce each other as cornerstones of central banks β legitimacy and effectiveness. at the ecb, our monetary policy mandate is for the euro area as a whole. and when the governors of the national central banks ( ncbs ) attend the governing council meetings, they are not representing their respective countries. they are there in a personal capacity and represent the interests of everyone in the euro area. so it is appropriate that we are held to account at european level, while the ncbs explain monetary policy decisions at national level. importantly, explaining decisions is not synonymous with exercising accountability. in principle, where a competence, such as monetary policy, has been fully transferred to european level, accountability should be practised at that level. this ensures that everyone in europe has the same ability to hold us accountable through the same bodies, namely the european parliament, complemented by judicial review by the court of justice of the european union ( cjeu ). in other words, a single monetary policy requires single accountability, but in a multinational setting it can be explained through various channels. attempting to strengthen political ties to national political systems, β renationalising β accountability through the back door, if you will, would only risk undermining the singleness of monetary policy and threaten its independence. people and markets would end up suspecting that the ecb is responding to national interests instead of acting in the interests of the euro area as a whole. accountability during crises central banks played a key role in managing the crisis and implemented some controversial measures. understandably, this triggered a demand for stronger scrutiny. the ec | 0 |
investments which help increase efficiency. d. a. irwin, long - run trends in world trade and income, world trade review ( 2002 ), 1 : 1, 89 - 100. imf, world economic outlook october 2007, chapter 4, p. 33. this is often one of the key arguments for the part of financial trade known as foreign direct investment or fdi. another benefit of financial globalization is the increased scope for consumption smoothing for individuals and countries. as the business cycle of emerging markets often is decoupled from that of industrialized countries, the possibility of global investment should also benefit investors in that they are able to spread their investment. however financial integration is also associated with a range of risks. these include a possibility for greater volatility as capital inflow can be withdrawn in the face of a crisis or just a change in sentiments and " flight to quality " as we have seen in recent months ; however, the effects on emerging economies have been small. the evidence suggests that the largest benefits from risk - sharing have accrued to advanced economies. countries with developed domestic financial systems, open trade, good governance and sound macroeconomic policies have not experienced greater volatility due to greater integration. those without these β thresholds β have. 3 reasons for globalization the shrinking importance of geographical distance due to technological progress is one important aspect of the increased interaction in the world economy ( slide 4 ). this is largely due to the evolution of transportation measures, reduced cost and increased speed. it has been an ongoing process through the century and is thus less likely to be the reason for the recent up - surge in international trade. communication possibilities through for example the internet has increased markedly over the past decades and has contributed to the increased globalization. however, the most significant change over the past decades has been the inclusion into the world economy of countries which were formerly very closed economies. the integration of china, india and the former communist bloc countries into the world economy and the increasing support for international rules and institutions such as the wto is thus one important explanation for the recent surge in international trade. 2. macro trends growth contribution first, the relative importance of the economies in the global economy is changing fast with the ( re ) emergence of the large and populous countries of russia, china and india into the global economy. in 2007 the imf estimates that china will be the largest contributor to global growth and be the fourth largest economy ; roughly the same size as the german ( slide 5 ). india | in both directions, thereby contributing to the difficulties we are now facing. danish house prices showed an almost constant upward trend from 1993 to 2007, particularly in 2005 and 2006. until 2005, growth in property prices during the most recent upswing was to a large extent attributable to low interest rates β especially at the short end of the curve β deferred - amortisation loans, higher disposable incomes, falling unemployment and the tax freeze. but the trend became self - fuelling. in the expectation that prices would continue to rise, new homes were purchased before the old ones were sold. property became an object of speculative investment. driven by expectations, combined with the economic upswing, prices of single - family and terraced houses soared by almost 25 per cent within one year from early 2005. the increase was even stronger in the copenhagen area. a hike of that magnitude cannot merely be explained by the underlying economic conditions. expectations also played a role. the rising property prices added fuel to the upswing. home equity increased, and consumers gained extra purchasing power. we witnessed a strong expansion in construction activities, with clear signs of overheating. and last, but not least, lending growth was particularly strong for banks with large - scale commitments to the property sector. it is characteristic that in the shadow of property - market developments activities took place that are now being investigated by the danish fraud squad. the rollback of these imbalances has amplified the impact of the international recession. declining property prices have not only affected the building and construction sector, but have also exacerbated the fall in consumption when compared with other countries. as regards the financial sector, it is worth noting that the ailing banks are primarily found among those that previously displayed the most aggressive lending policies in the property market. what does this tell us? in a market economy, crises can never be avoided. we must accept economic downturns from time to time. as a small, open economy we cannot guard ourselves against a sudden drop in external demand, reducing exports by almost 20 per cent in six months, as we have witnessed. but we can seek to conduct economic policy that does not in itself amplify economic fluctuations. we have not been good at that. during the upswing, our economic policy was procyclical, contributing to the upward trend. too little was done to curb it. you might say that we put the economy into a higher gear in a situation when it was | 0.5 |
). 3 ). we therefore revised down our forecast slightly in the short term. in 2008 we envisaged a gradual recover in productivity. after that, our assessment was that productivity growth would develop roughly in line with the trend rate of increase. several factors indicate that the long - term rate of increase in productivity will remain relatively high, although it will not be as high as during the years at the beginning of the 2000s. globalisation is one such factor, and will probably continue to be a driving force behind productivity for a long time to come. integration within the eu is deepening. the countries in eastern and central europe who have moved away from planned economies have many years of rapid development ahead of them before they catch up with western europe. the international competition in the product and labour markets and the financial integration process will thus continue to increase during the foreseeable future. the deregulation implemented in sweden in the 1990s in the communication and transport sector has probably already had its main impact on productivity. there is of course still scope for reforms to increase competition further and thereby also productivity. 14 but without such new initiatives the deregulation will probably not contribute as much to future growth. investments in it will probably fuel productivity for a long time. earlier experiences show that major development phases, such as electricity and the combustion engine, affected productivity growth over several decades. 15 as yet we know very little about the delayed effects on productivity from earlier it investments and reorganisations. hopefully, the productivity project i mentioned earlier will increase this knowledge. all in all, the indications are that long - term productivity growth will be slightly lower than in the past 10 - 15 years. the riksbank β s assessment is that the long - term rate of increase in productivity in the economy as a whole has fallen slightly to 2. 25 per cent a year. this is lower than during the period 1995 - 2006, when productivity growth was on average 2. 6 per cent a year, but slightly higher than the level of around 2 per cent a year that applies if the 1980s are included. the riksbank β s assessment is well in line with what, for instance, the national institute of economic research has assumed regarding long - term productivity growth in the economy. 16 in conclusion, let me briefly summarise my main message today. the rapid increase in productivity growth is an important explanation for the earlier low inflation. over the past year there has been a decline in productivity growth. this is assessed to be | , t. ( 2004 ), β labour quality and productivity : does talent make capital dance? β, background facts on economic statistics, 2004 : 07, economic statistics department, statistics sweden. hao, j., manole, v. and van ark, b., ( 2007 ), β intangible capital and growth β an international comparison of france, germany, netherlands, united kingdom and the united states, the conference board, to be published. haskel, j. and marrano, m g., ( 2007 ), β how much does the uk invest in intangible assets? β, cepr discussion papers, dp6287. hakanson, c. ( 2007 ), β effects of organizational change on firm productivity β, essay presented at sveriges riksbank β s conference on β understanding and predicting productivity growth β, stockholm, 30 november - 1 december, 2007. itps, ( 2007 ), β foreign companies 2006 β, report series s2007 : 005. national institute of economic research, ( 2005 ), β productivity and wages up to 2015 β, special study no 6, may 2005. national institute of economic research, ( 2007 ), wage formation report 2007. lundberg, l. and karpaty, p. ( 2004 ), β foreign direct investment and productivity in the swedish manufacturing industry 1990 - 2000 β, in β the internationalisation of the business sector β effects on employment, productivity and r & d β, itps report series a2004 : 014. lundgren, s. ( ed. ), edquist, h. and wallgren, a. ( 2007 ), tillvaxt i otakt ( growth out of time ), sns forlag. sveriges riksbank, ( 2007 ), box : β the riksbank β s company survey β, monetary policy report 2007 : 3. oller, l - e., ( 2007 ), β revisions of production data in the swedish national accounts β, background facts on economic statistics, 2007 : 2, economic statistics department, statistics sweden. | 1 |
its somewhat more negative position at the start of this year, lagging the other domestic demand components. external demand, meanwhile, will maintain its positive contribution to gdp, but with lower contributions than during the crisis years. several risk factors cloud this central scenario of recovery. first, the growth outlook for the euro area continues to point to moderate increases in activity in the coming quarters, likewise subject to downside risks. moreover, further headway in fiscal consolidation will be inevitable, which does not allow expansionary budgetary policies to be applied in the short term. in these circumstances, it is of great importance that any tax reform should prove conducive to economic efficiency and growth. with regard to private debt, credit may not be expected to recover at the aggregate level until economic growth has done so. meanwhile, the necessary deleveraging should continue to be compatible with the positive restructuring of credit, as attested to by the latest developments. in conclusion, i would say that economists and, even more so, those of us who work in the monetary and financial field, tend to focus on the short or very short term. but i would like to close my address with a reflection on the medium and long term. the twin engines of economic growth are demographic growth and increased productivity. our worrying population trend responds to complex economic, social and cultural factors that cannot be rapidly changed. but that does not mean that action should not be taken, as far as possible, to improve this trend. productivity growth is directly related to capital formation, which is in turn connected to saving. accordingly, any policy wishing to be effective in enhancing productivity must be underpinned by incentives to save and the lifting of any related institutional obstacles, something which is also connected to the reforms that boost competitiveness and legal certainty. spain must persist with reform policy geared to these objectives. thank you. bis central bankers β speeches | the agenda, to identify best practice, avoid unnecessary fragmentation and help achieve according to boar et al. ( 2020 ), as of late 2019 central banks representing a fifth of the world β s population reported that they were likely to issue cbdcs very soon. [ https : / / www. bis. org / publ / bppdf / bispap107. pdf ] β an update on digital currencies β, a speech by governor lael brainard at the federal reserve bank of san francisco, august 2020. [ https : / / www. federalreserve. gov / newsevents / speech / brainard20200813a. htm ] β payments in a digital world β, a speech by christine lagarde at the deutsche bundesbank online conference on banking and payments in the digital world, september 2020. [ https : / / www. ecb. europa. eu / press / key / date / 2020 / html / ecb. sp200910 ~ 31e6ae9835. en. html ] interoperability across borders. in this sense, i believe the role of international organisations and standard - setters, such as the bis in its role as a hub for central banks, could prove essential. cross - border payments : another topic of growing interest regardless of its importance, expanding access to a central bank β s balance sheet by making a cbdc available to households and non - financial corporations is only one of many ways in which technological innovation may help enhance the monetary and payment system. indeed, given how dynamic the payments market is nowadays, we need to keep abreast of and closely monitor any private initiatives that may overlap in the field of action of a cbdc. this is because they may ultimately prove to be equally viable options for achieving the same goals or remedying some of the common and long - standing shortcomings that traditional channels have faced. in that respect, the current landscape of evolving market infrastructures poses several telling examples, but in the interest of time i will concentrate today on one particular area, namely payments that have a multi - country dimension. cross - jurisdictional payments enjoy growing interest all over the world, not only because of their potential as a test bed for new technologies, but also due to the growing relevance of e - commerce, international trade and migration. 5 indeed, according to the cpmi chair, sir jon cunliffe, global financial transfers amounted to well | 0 |
, when combined with data vaults to securely store personal information, can be used to trade objects in a way that protects one's identity from being exploited for profit. while these technological developments are still in their infancy, they have potential applications beyond the crypto ecosystem that could lead to substantial productivity enhancements in other industries. 1 / 3 bis - central bankers'speeches this leaves us with the crypto - assets themselves. the question is, why would someone hold such an asset? what is the value proposition of such an asset? the answer isn't new or unique, but rather is based on economic relationships that result in objects having value. one reason objects have value is because of their intrinsic properties. for example, the value of corn derives in part from the fact that it can be used for food or fuel, or in some cases for thanksgiving centerpieces. intuition suggests that if an object has no intrinsic value, then the price of that object should be zero - why pay for something that has no fundamental value? shockingly, it turns out that objects may be valued well above what their intrinsic properties would suggest. since paul samuelson's seminal work in 1958 on intertemporal consumption smoothing, economists have known that an intrinsically useless object can trade at a positive price. 2 such an object's value is driven purely by belief. if i believe someone will pay a positive price for this object in the future, then i may be willing to pay a positive price now, carry it across time, and sell it when i need to consume other goods and services. samuelson referred to this concept as " the social contrivance of money. " while an intrinsically useless object can trade at a positive price, we also know that there is always a second equilibrium price for this object, which is zero. what if one day, beliefs change and i no longer believe that someone will pay me for this object in the future? then i clearly shouldn't pay anything for it today, so its price goes to zero. there are many intrinsically useless objects that still have value. consider things like baseball cards and celebrity autographs, which are pieces of cardboard and paper with pictures or scribbles on them. based on their fundamental properties, these things have little to no intrinsic value, yet can be in high demand and command staggering prices. what happens if one day, no one wants to collect baseball cards? as valuable as they are today, they wouldn't | while retaining a focus on lmi communities. in addition, the anpr seeks feedback about clarifying the definitions of qualifying activities and broadening certain definitions in targeted ways. for example, the board is considering defining cra - eligible activities that create or preserve naturally occurring affordable housing and is considering whether to broaden the set of volunteer activities that would qualify in rural areas. the board is also clarifying when a government or tribal plan is required to qualify activities that revitalize and stabilize communities. this is especially important in indian country, where we want to encourage banks to make impactful investments that have the support of tribal governments and to increase certainty about how these activities qualify for cra credit. recognizing the special circumstances of small banks in rural areas stakeholder feedback emphasized that smaller retail banks play a vital role in many underserved communities, such as in rural areas. accordingly, the anpr provides small banks in rural areas operating in just a portion of a large county greater clarity and flexibility in - 13 tailoring the facility - based assessment area definition. the anpr proposes that a small bank would not be required to expand the delineation of an assessment area to include parts of counties where it does not have a physical presence and where it either engages in a de minimis amount of lending or there is substantial competition from other institutions, except in limited circumstances. in addition, the anpr proposes to revise the definition of community development services to include a wider range of volunteer activities to address the particular needs of rural areas. the path ahead it has been 25 years since the last significant revision to the cra regulation, so it is important to get reform right. we are providing an extended 120 - day comment period to allow ample time for thoughtful feedback from a broad set of stakeholders. the input from stakeholders thus far has been tremendously valuable, and we appreciate the care and concern expressed in the many comment letters and other forms of input on this important regulation. in the weeks and months ahead, we look forward to reviewing your comments and analyzing options for greater impact, including changes to address the inequities and challenges faced by minority communities and individuals. this feedback is critically important, and we are ready to listen. stakeholders have expressed strong support for the agencies to work together to modernize the cra. by reflecting stakeholder views and providing a long period for public comment, the anpr is intended to build a foundation for the banking agencies to converge on a consistent approach to strengthening the cr | 0.5 |
right incentives and policies, emes could make a substantial contribution to mitigation efforts. also, given the current initial conditions, any amount invested in climate change mitigation in ems and ldc can have a larger decarbonization impact and thus a larger positive externality than in developed countries. a dollar invested in emerging markets and ldcs can have a higher mitigation potential, thus it makes sense to create the conditions for such investments to be made. it would be unfortunate if investments are not done for cost of funding reasons. according to a recent imf paper many of the world β s lowest - cost mitigation opportunities exist in emerging and developing economies. thus, it is in the global interest to make sure that these are pursued. however, the cost of capital facing emerging and developing economies is significantly higher than in advanced economies. 3 / 5 bis central bankers'speeches it is essential to move from a bad equilibrium with high financing costs and insufficient green investment, to climate friendly funding sources at scale for these countries at genuinely low financing costs. also, we need to acknowledge that emerging countries and ldcs have less space to spend on climate friendly projects than they had before the covid 19 pandemic, hence it is necessary to unlock attractive international funding from advanced economies at low interest rates in exchange for credible ghg mitigation. this will also increase the resilience of global financial system to climate risks. also, we need to develop innovative structures to diversify risk, through for instance, pooling a large set of projects in many jurisdictions backed with guarantee schemes or other de - risking solutions. blended finance structures can unlock private sector financing of the transition to a low carbon economy. also, aes ex - im banks could design new programs to unlock green investments in emerging and developing economies by offering long term loans with very attractive interest rates that could incentivize the adoption of state - of - the - art green technologies. this would allow emerging markets to leapfrog to modern green technologies, accelerating the mitigation of ghg. again, these efforts could be leveraged through mdbs loan guarantees. the imf has suggested the introduction of a minimum carbon price system, but adopting a onesize - fit all approach can face several challenges. in this regard, adjusting these minimum price for income per capita and carbon intensity could improve policy coordination and convergence. question 4. what role could be played by the imf and other multilateral development banks to foster | alejandro diaz de leon : remarks at a panel discussion on monetary policy challenges for emerging markets remarks by mr alejandro diaz de leon, governor of bank of mexico, at the s & p global ratings global emerging markets virtual conference 2021, central banks panel discussion : monetary policy challenges for emerging markets, 1 july 2021. * * * i. lessons learned by economic policy makers in emes from the pandemic the covid - 19 pandemic has been a human and economic crisis like no other. the novelty of covid - 19 and the tremendous uncertainty around the evolution of the pandemic made this crisis unique on several dimensions. it posed new challenges for policy makers, as we dealt with acute and persistent volatility in our financial markets. a deep economic contraction with a subsequent heterogeneous economic recovery, and currently with a high degree of uncertainty on inflation dynamics. our economic models and analytical tools were not designed to analyze crises like the present one, whose origin lies in a public health problem and not in the economic or financial cycle. in what follows, i would like to list several lessons along these lines. as central bankers, the first lesson was to address the financial shock and risk aversion spiral in a timely and decisively matter, to prevent a financial crisis. the financial shock hit during the first weeks of the pandemic, and it was necessary to adopt measures to restore an orderly functioning of financial markets. it is important to remember that, since their creation, central banks have had the responsibility of safeguarding the stability of the financial system. in their role as lenders of last resort, central banks have historically focused on providing liquidity to commercial banks. however, the development of increasingly complex and interconnected financial markets has posed new challenges for central banks. we had to design our policy response taking into account the new realities of our financial systems. this time the resilience of domestic financial sectors to adverse shocks, along with the liquidity provided by systemically important central banks, proved to be very important to stabilize international financial markets. in the case of mexico, the governing board embarked on a series of interest rate cuts and implemented a series of measures to provide ample liquidity ( up to 3. 3 % of gdp ), within its legal mandate in order to foster an orderly functioning of domestic markets and strengthen the economy β s credit channels. all measures were intended to set the conditions so that financial intermediaries could fulfill their primary function of providing financing to the economy | 0.5 |
on the right issues that will move the industry forward and expand the opportunities for growth. it should take an assertive and expanded role in aligning the interests of different stakeholders towards a common purpose, and it should deal firmly with any party that attempts to distract the industry from this purpose. this of course would call for a strong leadership, a strong conviction and desire to act in the long term interests of the common good. it was said that insurance business is about promises and trust. but its more than that. it is about delivering to the customer in their times of need. it also about delivering value to the promises we made. its about fulfilling and exceeding the trust the policyholders placed on us. these principles are enduring and with infinite timespan. i hope that these principles would guide liam as the industry chart its a new path into the future. on behalf of the bank, it gives me great pleasure to congratulate liam on this occasion of its 40th anniversary. much has been achieved, much more still remains to be done. i have every confidence that the industry will rise to the occasion and throw its full support behind liam in navigating the road ahead. on its part, the bank will continue to work with the industry in achieving the smooth implementation of reforms proposed for the industry. as expectations of liam increase with the evolution of the industry, i trust liam shall continue to reinvent itself to remain relevant and effective. with the world changing in profound ways and sometimes in a manner that confound us, this is the time for the insurance industry to assert its relevance and provide solutions to the challenges that confront our society. bis central bankers β speeches | muhammad bin ibrahim : brief overview of malaysia β s insurance industry welcoming speech by mr muhammad bin ibrahim, deputy governor of the central bank of malaysia ( bank negara malaysia ), at the life insurance association of malaysia β s 40th anniversary dinner, kuala lumpur, 21 november 2014. * * * i am pleased to be here to celebrate the life insurance association of malaysia β s 40th anniversary dinner. i notice the presence of a number of senior and veterans who have previously served in the industry, as well as the next generation of leaders who shall bring the malaysia β s insurance industry to the next level of excellence. over the course of 40 years, the insurance industry has seen significant development and progress. many of you present here join me in bearing witness to the important strides that have been made to bring the industry to where it is today. these achievements go well beyond the individual successes of any one company, any one individual. the most significant milestones were accomplished through the collective vision of the industry coming together to lay the strong foundations for future growth. the association has been instrumental in this process, working closely with the bank since we assumed the regulatory function of the insurance industry from the ministry of finance back in 1988. industry β s achievements today, the life insurance industry contributes 2. 8 % of malaysia β s gross national income ( gni ), with premiums totalling rm26 billion in 2013. more than 18, 000 are employed in the industry. the life agency force has grown to about 80, 000, with more of them earning higher average incomes as they pursue professional careers as full time insurance agents. the industry is on a strong financial footing with excess capital of rm23. 5 billion, above the regulatory minimum capital requirement. expense rates have declined from 41 %, prior to the introduction of the guidelines to control operating cost of life insurance business, to 26. 3 % in 2013, representing significant efficiency gains that have created a more competitive industry and improved value for policyholders. most importantly, the life insurance industry has continued to innovate through new products and distribution channels, providing individuals protection against financial risks and help them meet their financial goals, whether for education, retirement, or to pay for medical expenses. in 2013, the industry paid out over rm16 billion in benefit claims to policyholders under various life insurance policies. the life insurance has contributed to the betterment of the health and malaysian in general. the life insurance industry has also had a key role in the development of malaysia β s | 1 |
distressed banks in the future. the aim was to make sure norges bank avoided intruding into the arena of the fiscal authorities. it is not up to an independent central bank to spend taxpayers β money. when norwegian banks β funding dried up in the aftermath of the lehman brothers collapse, government bonds were swapped for covered bonds issued by banks. that is, the ministry of finance became the banks β counterparty in the swap arrangement. we thereby avoided an expansion of the central bank β s balance sheet while improving the liquidity and funding situation of our banks. the most recent global financial crisis has taught us that it is vital to focus on the financial system as a whole, and not only on its components. many of the risks that played a role in the recent crisis were identified by central banks and international financial institutions. however, not enough attention was paid to the ways in which these risks were interconnected and how they reinforced each other. system - wide risk amplified the financial crisis and its global repercussions. an international response to the management of systemic risk has been to introduce macroprudential regulation. bis central bankers β speeches however, incorporating systemic oversight in the financial stability framework poses considerable analytical and operational challenges for most countries. indeed, we as economists have relatively limited understanding of the design and effectiveness of macroprudential policies. but, even when inflation targeting was introduced, not much was known about how to go about implementing it. practice and research developed in parallel, interacting. we hope to see similar developments regarding macroprudential policies. to this end, norges bank, like many other national and international monetary authorities, is actively working to further develop the conceptual and analytical foundations for macroprudential policy. several analytical approaches for the identification of the factors contributing to the building up of systemic risk may be used and different policy tools may be employed to address them. one policy instrument introduced by basel iii is the countercyclical capital buffer. in line with our past experience of dividing responsibilities, the ministry of finance will implement countercyclical capital requirements from 2013. norges bank will make recommendations for its buffer decisions. we therefore need to strengthen our understanding of macroprudential regulation and develop relevant analytical tools for our recommendations. the financial crisis called renewed attention to the fact that developments in the real economy and the financial sector are closely linked. in response, norges bank has decided to provide monetary policy and financial analyses in a joint report published quarterly as from 2013. | the reports will form the basis for both monetary policy decisions and for our advice on the buffer. the primary objective of monetary policy is low and stable inflation over time. we operate a flexible inflation targeting regime, which also aims at stabilising economic activity. furthermore, norges bank gives weight to the risk that a prolonged period of low interest rates could lead to elevated risk - taking and excessive debt accumulation in the household and business sectors. there is always room for improvement. we will seek to improve systemic risk indicators and macro - stress testing approaches, keeping them at the research frontier. we will also work to better incorporate the financial sector in our macroeconomic models. economic research can contribute significantly to this, and in this context, some fundamental questions need to be addressed. β first, what is the macroeconomic impact of financial regulations? a greater understanding of how financial regulations act at the aggregate level is needed, both in containing systemic risk and in affecting the growth potential of economies. this would enable us to make more informed policy recommendations. β second, how should systemic risk for banks, non - bank financial institutions and markets be identified and measured? economists have proposed several methods of measuring systemic risk. but more research is needed in order to understand systemic risk arising from banks and non - bank financial institutions and their interaction. β third, how should monetary policy be conducted in the context of macroprudential policy? and there are many more questions, some of which will be discussed during this workshop. we are eager to learn from the expertise and the experience of other countries. norges bank is committed to investing in research and supporting cooperation with other central bankers and foreign academics. this workshop is one product of this commitment. we are fortunate to have such prominent speakers contributing to the program. i wish you fruitful and stimulating discussions, and i hope you enjoy your stay in oslo. fortunately, the weather is on our side, motivating us to stay focused on our work. it would have been more difficult on a sunny day in june. bis central bankers β speeches | 1 |
concept of the β home market β well beyond their home country β s borders. for example, nordic parent banks continued to provide liquidity to their baltic affiliates even during the years of the deepest crisis in the baltic economies. in today β s slow growth environment, it remains important for competitiveness and growth that there should be an appropriate level of financing in the whole region. the broader concept of the β home market β should be developed further. one of the challenges will be to ensure strong competition in retail markets so that the benefits of integration could be felt by consumers across the region. fostering sustainable growth in the region requires us to take a systemic view when designing harmonized regulation for the financial sector, and this is where the quality and proactivity of macro - prudential supervision becomes so important. the nordic - baltic dimension adds two nuances to the design of macro - prudential policies. first, our own experience of the past decade was a stark reminder of the particular challenges of managing capital flows in highly integrated economies and financial sectors. second, most of the large nordic banking groups have been considered as too big to fail in almost all countries in the region. bis central bankers β speeches diversity in the financial sector structures is a challenge for cross - border cooperation as i said earlier, the economies and financial sectors of the nordic - baltic region are diverse as well as closely integrated. different countries in the region have opted for different policy frameworks ; the structure of the financial sector also differs by country. it turns out that in a region of only eight countries, some of which are very small, one needs to tackle very much the same array of problems that make the coordination of financial sector policy and supervision so challenging in europe. there are home and host countries ; there are non - eu member states, eu member states, and euro area member states. there are differences in economic, lending and asset price cycles, and there are also differences in economic history, crisis experience and institutional arrangements. the developments in recent years have exacerbated these dissimilarities and perhaps even created new ones. it appears to me that the success in combining the positive aspects of diversity and integration in the nordic - baltic region may serve as a model for the european union. if cooperation and coordination has been possible in this region, there is reason to hope for the same in the european union as a whole. cooperation between the institutions responsible for financial stability in the region has a history of over 10 years. | ardo hansson : nordic - baltic financial linkages and challenges opening remarks by mr ardo hansson, governor of the bank of estonia ( eesti pank ), at the conference β nordic - baltic financial linkages and challenges β, tallinn, 13 december 2013. * * * i am honored to welcome you here in tallinn at the conference nordic - baltic financial linkages and challenges jointly organized by the imf, riksbank and eesti pank. jean monnet once famously said that europe will be the sum of the decisions taken in crises. we hope to have soon put one of these crises behind us. we now know that inadequate assessment of risks and weaknesses in the regulatory and supervisory framework were among the causes of the crisis. we hope that the lessons learned from the crisis will be profound and lasting enough to provide the energy for us to follow through with the fundamental reforms we have initiated in the eu. we also now understand the need to remain vigilant and ready to act against possible new risks to financial stability. today β s conference will take a close look at the challenges and rewards involved in the evolution of a new paradigm in the operation and regulation of the european financial sector. the financial sector in the nordic - baltic region is regularly used as an example of regional integration and cooperation. in my remarks, i would like to highlight the key features of the region and put them in the broader context of european developments. taking care of the large nordic - baltic β home market β first of all, we should keep in mind that the nordic - baltic region is characterized by considerable diversity : diversity in monetary policy frameworks, models of economic development and financial structures. the second key word of the nordic - baltic region is integration β the region is characterized by tight trade and financial ties within the region as well as with europe and global markets. therefore, the region β s competitiveness and growth potential are important to each country in the region. the bank groups that finance growth in the region are largely the same in every country. all these groups are currently highly rated and well capitalized in comparison to others in europe. as a result of mergers and natural growth, the total assets of the larger banks have risen to a high level compared to regional gdp, not to mention their very high level as a ratio to the gdp of their home countries. the combination of common economic interests and financial sector integration has fostered the emergence of a unique feature of the nordic banking groups : they have extended the | 1 |
, however, regulators were coming to regard capital requirements as a supple prudential tool. as activity and, eventually, affiliation restrictions were loosened, capital requirements seemed a promising way to provide a buffer against bank losses from any activities in which the bank or its affiliates might engage. support also developed for the proposition that minimum capital levels could, by maintaining a material equity value for the bank, serve as a disincentive for excessive risk - taking by management and shareholders. as the activities and affiliations of banks became increasingly complex, regulators also relied more on focused supervisory attention to the specific risks of each institution. similarly, they demanded that banks enhance their own internal risk - management systems. as with capital requirements, regulators reasoned that a good risk - management system could effectively promote bank stability in the face of quickly changing bank activities. the two regulatory trends β seeking greater risk - sensitivity in capital requirements and greater effectiveness of internal risk - management systems β came together in basel ii's advanced internal ratingsbased approach to capital regulation. thus, at the onset of the current crisis, the financial regulatory system had accommodated the growth of capital market alternatives to traditional financing by relaxing some restrictions on bank activities and virtually all restrictions on affiliations between banks and non - bank financial firms. in place of the superseded restrictions were capital requirements focused on credit and market risk, along with a greater emphasis on supervision and risk management, especially at larger firms. these legal changes facilitated a wave of mergers and acquisitions that created a number of very large, highly complex financial holding companies centered on a large commercial bank. these were subject to prudential regulation. at the same time, there was a group of very large, significantly leveraged " free - standing " investment banks whose market practices were regulated by securities laws, but were not subject to prudential regulation. the imperative of regulatory reorientation there were, of course, many ways in which this financial regulatory system fell short of the objectives of maintaining stability in the financial system. any one explanation inevitably oversimplifies what was a complex and long - developing set of vulnerabilities. however, as i have earlier suggested, i believe an analysis can be profitably organized around the premise that the regulatory system did not come close to adequately accounting for the impact of trading and capital market activities on both traditional banking and systemic risk. this basic point was manifest in three important deficiencies of the prevailing regime : the shortcomings of microprudential regulation, the | either a complement to, or partial substitute for, existing capital rules. another example is the idea that certain short - term wholesale funding channels might be guaranteed, perhaps in connection with specific forms of securitization activities, in exchange for an insurance premium and regulatory requirements. finally, there are some options that are considerably more dramatic. proposals to limit the size ( or interconnectedness ) of financial institutions would represent a historic break with how we have regulated the financial system. 9 for that reason alone, as well as the potentially enormous consequences of such measures, this is not an idea that should be advanced lightly. however, if one accepts the basic premise that our financial system will remain healthy only if the too - big - to - fail problem is addressed in a muscular way, this kind of idea has at least heuristic value in making us think hard about the degree to which the regulatory path we set for ourselves is leading to the proper destination of greater financial stability. the statutory prohibition upon interstate acquisitions that would result in a commercial bank and its affiliates holding more than 10 percent of insured deposits in the united states is the closest instance of this approach in current law. see 12 u. s. c. Β§ 1842 ( d ). conclusion i have noted the observation of a number of thoughtful commentators that, given the continuing difficulties in credit markets, we need not rush to reform our regulatory system. while i certainly agree with the propositions that we are unlikely to see widespread financial excesses in the near term and that we must get reform right, i believe it is essential to move forward now. history shows that opportunities for real reform are often short - lived. momentum can too easily be lost, and the return of better times too easily leads to complacency. if we are to spare the next generation the pain and loss caused by a financial crisis, we must not only learn lessons. we must act on them. | 1 |
to reduce the cost of loans, above all as a result of the compression of illiquidity premiums. the complexity of structured instruments was coupled, however, with a lack of transparency, in particular as regards their valuation ( in which a crucial role was played by rating agencies, without any particular control by regulatory authorities or information providers ), by means of statistical models and often carried out on the basis of incomplete and insufficient data. we can now say β unfortunately well into the financial crisis β that opportunistic behaviour by managers, fueled by a distorted system of incentives, especially with reference to executive compensation, led to the creation of unnecessarily complex and opaque financial assets, with the effect of preventing a correct assessment of creditworthiness and often causing excessive risk - taking. the unsustainable growth of external imbalances in this context more and more in recent years the model of growth of the world economy was based on a growing imbalance between a steadily declining us saving rate ( negative for the household sector ) and highly positive rates for china and other emerging countries ( as well as japan ). this led to large external deficits for the united states and huge surpluses for the rapidly growing countries, which served to finance the twin ( budget and external current account ) deficits of the united states. this was soon recognized since the unsustainability of growing current account imbalances was evident, even though variations in the value of financial assets and liabilities contributed to reducing the explosive expansion of the country β s net external position ( figure 1 ). the risks associated with such a growth model, in which the rapid expansion of the world β s largest economy was financed with capital from the rest of the world, including, somewhat paradoxically, emerging and developing countries, had been stressed repeatedly and from many sides, although there was no lack of less alarmed observers and analyses suggesting that what appeared to be fundamental imbalances in the external accounts were the result of sustainable developments. at all events, the analyses produced by government and international institutions regularly pointed to the possibility that those imbalances might give rise to rapid and disorderly adjustments, with sudden realignments of the external value of the dollar and abrupt falls in us domestic demand, as the main threat to stable growth of the world economy. in the end, the financial crisis was not provoked by a flight from the dollar but by the slump in the us housing market and the consequent depreciation of structured | kingdom united states 2008q4 + 7. 5 % sources : based on fhfa, nationwide and national statistics. for the methodology, see finicelli, a., β house price developments and fundamentals in the united states, banca d β italia, questioni di economia e finanza, no. 7, 2007. note : ( 1 ) equilibrium level = 100. the theoretical level of house prices is equal to the ratio of rents to the user cost. the latter is given by the sum of interest payments on mortgage loans, maintenance costs and property taxes, net of the expected increase in house prices. figure 7 : average absolute error in the gdp growth rate in the period 1999 - 2007 : comparison between the main forecasters ( percentage points ; the transparent histogram refers to the error made in the forecast for 2008 ) forecast following year forecast current year 2. 5 1. 5 1. 15 0. 92 0. 97 1. 13 1. 00 0. 5 0. 30 bank of italy 0. 34 prometeia 0. 35 0. 43 consensus imf 0. 49 ec consensus imf bank of prometeia italy ec note : average of the forecasts made in the spring and autumn of each year by the bank of italy, prometeia, consensus economics, the international monetary fund and the european commission. figure 8 : revision of the gdp growth estimates for 2008 : italy and the euro area 2. 0 1. 8 italy 1. 5 1. 5 1. 0 euro area 1. 6 1. 2 1. 2 0. 9 0. 5 0. 6 0. 4 0. 0 - 0. 5 - 0. 5 - 1. 0 january 2008 april 2008 july 2008 october 2008 january 2009 source : consensus economics. note : the gdp growth rate in 2008 for italy was - 1 per cent and for the euro area it was 0. 7 per cent. figure 9 : revision of the gdp growth estimates for 2009 : italy and the euro area 2. 5 2. 0 italy euro area 1. 5 1. 7 1. 5 1. 0 1. 2 1. 1 0. 5 0. 8 0. 5 0. 0 - 0. 5 - 1. 0 - 1. 5 - 1. 4 - 1. 6 - 2. 0 january 2008 april 2008 july 2008 october 2008 january 2009 source : consensus economics. figure 10 : breakdown of the gdp forecasting error for italy in 2008 0. 4 | 1 |
. get our house in order : monitoring and managing our own climate impacts. _ _ _ _ _ _ _ _ _ _ _ _ reserve bank of new zealand act 2021 β issuance of the financial policy remit 2022 https : / / www. rbnz. govt. nz / about - us / responsibility - and - accountability / our - financial - policy - remit monetary policy statement 17 august 2022 https : / / www. rbnz. govt. nz / monetary - policy / about - monetary - policy / history - of - the - remit - and - policy - targets - agreement climate change and inflation, see monetary policy statement november 2021 ( rbnz. govt. nz ) we asked the public β s views about the economy, what matters to them and how decisions that we make can affect new zealander β s daily lives. see https : / / www. rbnz. govt. nz / haveyour - say / closed - consultations / monetary - policy - committee - remit - review endorsement unclassified unclassified 2. get the settings in place : mainstreaming climate by understanding and incorporating the impacts of climate change into our core functions, like prudential supervision and financial system analysis. 3. show the way : leading through collaboration. climate challenges the financial system is a critical β engine β that works to identify, price, and allocate risk. climate risks are evolving, and the market is working to come up to speed on those risks. but historically, that engine hasn β t fully addressed potential risks from climate change. this is partly because we simply do not know the true scope and scale of the environmental risks we take on during our daily economic activities. transition risks have also proved elusive : it β s hard to identify a risk when the timing and magnitude of climate policies in new zealand or overseas are unknown. likewise, many of the material costs of our economic decisions are β externalised β, that is, borne by others including future generations. solving the moral hazard of transition costs falling on the present generation, while the benefits of those actions ( in reduced climate impacts ) accrue to future generations, has proved a tall order. what this means is that we will never have perfect information on the risks of climate change. however, the mandatory climate - risk disclosure standards being developed by the external reporting board ( xrb ) and to be independently monitored and enforced by the financial markets authority ( fma ) will help start closing some | the half - year to march 2011, and these banks have made additional provisions in the region of $ 125 million β well under 0. 1 percent of their total lending. bis central bankers β speeches overall, there still remains a great deal of uncertainty in quantifying the effects of the earthquakes. provisioning estimates have been based on many unknowns, and these will be subject to change as the insurance climate and other uncertainties become clearer. as the regulator for insurers, the reserve bank is now responsible for overseeing the introduction of new prudential requirements for insurers, including new solvency standards, fit and proper requirements for directors and other senior officers, and a requirement that insurers have appropriate risk management programmes. all insurers wanting to continue insurance business in new zealand must obtain a licence by march 2012. it is well known that one large insurer ( ami ) has faced financial difficulties associated with meeting the large value of claims, while some small niche insurers have indicated they intend to selectively withdraw coverage nationally or from certain regions. insurers remain cautious about writing new insurance in this environment. balance sheets of other insurers have been significantly impacted, in some cases requiring more capital, and shareholders, including foreign owners, are providing this, as is appropriate. the reserve bank continues to monitor the effects on balance sheets in the insurance sector. our focus is on the soundness of the sector, and so we are particularly interested in levels of existing and future catastrophe cover. we are starting to see higher global reinsurance costs being reflected in increased non - life insurance premiums for new zealand customers. we are yet to see how the industry realigns itself as a result of these events. there is the prospect of some consolidation with the purchase of ami by iag ( subject to regulatory approvals ), and we are seeing changes to reinsurance capital requirements and availability of insurance. we can expect that there will be changes, and that the industry will adjust. new zealand is well - placed in that insurance will fund the majority of the costs of the canterbury earthquakes, and most of this funding comes from large offshore reinsurers. new zealand is unusual in its degree of insurance and re - insurance. in other parts of the world, such as japan, government, businesses and households have borne a much greater share of disaster costs. the wider impacts of the earthquakes following the earthquakes, we saw sharp declines in consumer confidence and business sentiment throughout the economy. short | 0.5 |
way to low, stable, and predictable inflation, and inflation expectations are firmly anchored. we both approach the inflation target in a symmetrical way. this helps to smooth the ups and downs of the business cycle and, more generally, has led to stronger economic growth in the long term. how does inflation targeting help in the context of today's global economy? first of all, by reducing uncertainty about the future value of money, a climate of low and stable inflation maximizes the clarity of signals that are sent by prices. this helps businesses to make appropriate investments. further, central banks pursue inflation targeting by adjusting interest rates with the goal of keeping total supply and demand in the economy in rough balance. in doing so, monetary policy can make it easier for resources to shift from sector to sector. this is particularly important in times such as these, when large swings in relative prices highlight the need for rapid adjustments in economic activity. one of these relative prices is the exchange rate. a flexible exchange rate is very useful because it helps the economy adjust to shocks, especially external shocks that affect different economies in different ways. but large movements in the exchange rate can pose difficulties for particular sectors. and it can be harder for policy - makers to keep following the right policies when some important economies are seen to be circumventing what could be called " the rules of the game. " the right international policies i'll come back to this point, and discuss the international financial system in just a moment. but first, let me say a few words about international trade. our reliance on international trade means that both chile and canada have a particular interest in promoting the free flow of goods and services. all countries should be working to push the doha round of multilateral trade negotiations to a successful conclusion and to strengthen the world trade organization in order to ensure proper compliance with the rules of trade. and policy - makers need to be vocal in resisting calls for protectionism. unfortunately, progress on trade appears to be stalled, and protectionism is a real and rising threat. the calls for protectionist action are, perhaps, a natural by - product of today's globalized economy. as the world economy has developed, domestic firms have found themselves having to adjust to global forces much more quickly than in the past. with the globalization of markets has come intense competition in many sectors. without question, this globalized economy has brought tremendous benefits to our citizens. but in the face of competition, policy - makers have heard calls to | of liquidity into the global economy. clearly, this liquidity helped to encourage the strong growth of recent years. but now, central banks are in the process of removing some of it. the interest rate increases seen to date, and the prospects for more increases to come in some countries, have been associated with somewhat increased volatility in financial markets, as investors adjust their expectations about future growth. this withdrawal of liquidity is completely appropriate, given that the global economy is now likely not too far away from the limits of its capacity. thus, it seems very likely that global growth will slow to a more sustainable pace. ideally, this would take place in a relatively smooth way. but there are a number of risks surrounding this scenario, and there is a possibility that global growth will slow more sharply than desired, to the detriment of our two economies. the most important risk has to do with the way global imbalances are ultimately resolved. there are a couple of concerns here. first, in order to reduce its current account deficit to sustainable levels, the u. s. economy needs to reduce its domestic demand. but as i mentioned, u. s. demand has been a key support for the global economy. so it is crucial that other major players boost their domestic demand to pick up the slack. specifically, it is important that china and the economies of emerging asia take steps to reduce their savings by strengthening household demand. it is also important that demand in europe and japan continue to strengthen, to help global economic growth smoothly " rotate " away from the united states without global demand slowing too much or too quickly. it is crucial that financial markets remain confident that policy - makers are serious about putting the right policies in place to allow for an orderly resolution of imbalances. as long as they have this confidence, financial markets are likely to continue to function smoothly. but my main concern is that if we don't make more progress in implementing the right policies, then we run an increased risk of global financial instability. and such instability could then spill over into trade in goods and services, leading to a dramatic decline in global growth. so, what are the right policies? this will be the subject of the rest of my remarks. let me begin by looking at this question from the perspective of domestic policies before turning to international issues. the right domestic policies my counterpart at the banco central de chile, vittorio corbo, spoke at a conference on central banks and global imbalances | 1 |
a situation came along that shifted the mean, the strategy might need to be altered. it might be argued that this is what has happened over the past five years or more. the terms of trade event we have lived through is without precedent in its size and duration, at least in the past century. the exchange rate has responded. notwithstanding that, in my view, the australian dollar is probably above its longer - run equilibrium at present, it is far from clear that we can assume that the mean level we saw in the 1980s to the early 2000s will be the relevant one in the future. in evaluating the merits of intervention, the bank has been cognisant that the current episode is unlike the experience of the first twenty or twentyfive years of the float. some very powerful forces have been at work. a further factor relevant to intervention decisions has been cost. intervening against the australian dollar would have been involved selling australian assets yielding, say, 3 per cent, and buying foreign assets yielding much less β in fact earning almost nothing over recent years at the areas of the yield curve where the bank operates. this β negative carry β would be a cost to the bank β s earnings and therefore commonwealth revenue. now it might be argued that a negative carry for the reserve bank, and therefore the commonwealth, and an acceptance of the associated very large valuation risks, would be a price worth paying, if it corrected a seriously misaligned exchange rate. if such a policy were effective, it could turn out to be profitable, if a fall in the exchange rate offset the negative carry. the point is simply that costs have to be considered alongside the likely effectiveness. often those who argue for intervention don β t work through those costs, or they assume it would be entirely costless. that can β t be assumed and the idea should be considered in a cost - benefit setting. overall, in this episode so far, the bank has not been convinced that large - scale intervention clearly passed the test of effectiveness versus cost. but that doesn β t mean we will always eschew intervention. in fact we remain open - minded on the issue. our position has long been, and remains, that foreign exchange intervention can, judiciously used in the right circumstances, be effective and useful. it can β t make up for weaknesses in other policy areas and to be effective it has to reinforce fundamentals, not work against them. subject to those conditions, it remains part of the toolkit. conclusion when the | is actually rather scant over the floating era as a whole. arguably some of the bigger misalignments occurred under previous exchange rate regimes. but what of recent levels of the exchange rate? they have been blamed for many disappointing corporate results and triggered numerous restructurings, instances of β offshorings β and job shedding. the only other factor so frequently offered to explain bis central bankers β speeches disappointment is β consumer caution β. one can imagine that many people would see this as prima facie evidence of the exchange rate being significantly misaligned. there are a few difficulties in evaluating that claim. first, very high terms of trade can be expected to lead to some loss of β competitiveness β, as noted above. just how much of this would be expected depends, among other things, on how permanent the terms of trade rise is, but this episode has been very persistent so far. the euphemism β structural adjustment β hardly conveys the difficulties faced by firms and their workforces affected by these forces. but a big and persistent shift in relative prices, which is what the terms of trade shift amounts to, was always going to produce some such effects. a further difficulty in assessing the exchange rate β s level lies in that very persistence. the relationship between the exchange rate and the terms of trade has, broadly speaking, continued to hold ( graph 5 ). nothing looks very unusual right at the moment. but this relationship is estimated over a period in which the changes were generally cyclical. it is at least conceivable that a large and persistent rise in the exchange rate may have effects on the economy beyond those discernible from the experience of the past thirty years, if previous rises in the exchange rate were not long - lived enough to cause significant structural change. this is a possibility the reserve bank has noted in the past couple of years. 6 there is at least one more complication in assessing the exchange rate β s recent behaviour and that is the extraordinary monetary policy measures that are being undertaken in the major economies of the united states, japan and the euro zone. these too are outside any historical experience. such measures are in place because they are required by the circumstances of those economies, but there is no doubt that they have fostered the so called β search for yield β. that, after all, was the whole point. added to this is the lessening, even if only at the margin, of perceived creditworthiness of a number of sovereigns | 1 |
an immense debt of gratitude. gratitude also to the leaders who maintained a steady hand during the 1990s in the run - up to the euro, in a very difficult environment. this anniversary is no time for complacency. but for continuous efforts, because the challenges lying ahead for monetary union will be numerous and demanding. as one of the major central banks in the industrialised world, we, like the others, have three challenges to cope with in our monetary policy - making : rapid technological progress, globalisation in all its dimensions, including the transformation of global finance, and population ageing. on top of those three major challenges, the ecb and the eurosystem have to cope with two other important, self - assigned challenges. the first is the deepening of economic and financial integration at continental level, the progressive completion of a single economy with a single currency ; we are the only central bank which is actively contributing to a major structural transformation of its own economy. the second is enlargement : we are called upon to extend progressively the euro area across the european union as a whole ; we are also the only central bank to undertake such an endeavour. economic union itself has its own challenges. i see three major challenges for the eurogroup, for the governments of the euro area and for the commission. the full and complete implementation of the stability and growth pact, which is a crucial component of emu in the absence of a european federal budget. the resolute pursuit of structural reforms in line with the lisbon process, which are decisive in order to raise the long - term growth potential of europe. and the lucid monitoring of the national competitive indicators, including unit labour costs. europe can count on the ecb and on the eurosystem to implement in this century the historic task which was assigned to us at the end of the last century. we will be faithful to the primary mandate given to us by the treaty. we know that our fellow citizens are asking us to deliver price stability. we know also that price stability is a prerequisite for financial stability, a very important objective at the current juncture. all the members of the governing council make their decisions taking into account the interests of the whole of the euro area, of 15 countries. we do not consider any particular country, but all 15 of them. and as i said, in the current juncture there is no place for complacency but for permanent credible alertness. 2. the ecb and | all these factors can contribute to higher inflation and lower growth, which can erode the purchasing power of households and businesses. as 3 / 6 bis - central bankers'speeches we all know, such events are becoming more frequent in recent years. therefore, it is essential that we take concerted climate action to safeguard the future of our planet and its inhabitants. 14. the g20 countries have a major responsibility in providing leadership for global action on climate change and provision of climate finance, together with transfer of technology, to take this agenda forward. in dealing with weather related disasters, india has made noteworthy progress in its green transition agenda and capacity creation for efficient disaster management. sharing our experience with other g - 20 countries could open up scope for collaboration, in pursuit of the common goal of a greener global economy. 15. it is noteworthy that india is the highest ranked g20 country according to the climate change performance index3 2023 and is also the 5th best performing country globally. given that india is widely expected to remain as one of the fastest growing economies in the world, our energy demand could rise manifold. the challenge for us is twofold : one, to meet the projected increase in energy demand ; and two, to rapidly transition from fossil fuel to renewables. 16. climate proofing of our infrastructure has also been a priority, more so in view of the large investment in infrastructure in recent years. through global forums such as the coalition for disaster resilient infrastructure ( cdri ) 4, india is providing leadership to global efforts for addressing these challenges. 17. we live in a world where the global macro - economic and financial outlook may become increasingly uncertain because of climate events, and only a committed global response with a spirit of collaboration can help mitigate the impending risk. in this context, the need for scaling up climate finance for mitigation and adaptation efforts in a balanced manner is well recognised if we were to meet the ambitious net zero targets. in this endeavor, multilateral development banks ( mdbs ) have an important role to play. they must evolve to meet the increasing demand for lending resources, provide knowledge support and catalyse private investment while continuing with their traditional roles of poverty reduction and achieving the sustainable development goals ( sdgs ). to address these issues, the g20 has set up an expert group to deliberate on strengthening the mdbs. 18. as i proceed to conclude, let me state that recent developments in the us banking system have brought to the fore the | 0 |
rasheed mohammed al maraj : bahrain develops its financial centre in the gulf region address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the bnp paribas β inauguration of new premises at the bahrain financial harbor, manama, 9 november 2008. * * * monsieur de courscel, monsieur durand, ladies and gentlemen : it is an honour and a pleasure for me to join you today to celebrate the formal opening of the bnp paribas premises at the bahrain financial harbor. may i welcome m. de courscel and his colleagues who have travelled from paris to be with us today. their presence is indicative of the importance that bnp paribas places on the development of its business in the gulf region and an acknowledgement of the role of bahrain as the leading financial centre of the region, can play in that development. the bank β s relationship with bahrain goes back nearly 35 years and this relationship has been rather special. with the granting of a full commercial banking licence in february 1975, the bank became the first european mainland banking institution to conduct business in bahrain. later in the same year, the bank was one of the first international institutions to be granted an offshore banking unit licence. therefore, from an historical perspective alone, the bank has been closely involved in, and has become an integral part of, bahrain β s development as an international financial centre. the professional competence of its staff, the commitment of local management to maintain and enhance its operational base in bahrain, and the support given to this concept by its regional and head office directors, have been foundations upon which a success story has been built. at the beginning of this decade, bahrain was officially appointed as the hub for the bank β s regional operations. the opening of these splendid premises at the bahrain financial harbor are a physical expression of the success that bnp paribas has subsequently enjoyed in the region. these are, of course, challenging times for the global financial system. there now seems little doubt that, in the short term at least, this region will not remain unaffected by the global economic downturn. however, it is important to look beyond the immediate picture and focus instead on the long - run prospects for global and regional economic growth. the fact that bnp paribas is now strengthening its commitment to this region, is testament to its view that many good business opportunities are still to be found here. i am confident that the success that bn | rasheed mohammed al maraj : impact of technological innovation in bahrain address by his excellency rasheed mohammed al maraj, governor of the central bank of bahrain, at the middle east financial technology exhibition & conference ( meftec ), manama, 11 february 2008. * * * good morning ladies and gentlemen, i am pleased to welcome you to bahrain for the 4th middle east financial technology exhibition & conference, meftec as it is popularly called. this morning, as i look around, i am happy to see that this event is arousing so much interest and is attracting more and more participants each year, a clear testament to itaβ¬β’s success. i would like to thank the organizers for their efforts in enhancing and improving each event and the delegates for their participation. i wish you a pleasant stay here. bahrain, as many of you may already know, is best known for its success in banking and finance, an industry whose global reach and, indeed, penetration into every household, would not have been possible without information technology. in short, information technology has had, and continues to have, a profound impact on the way we, as individuals, live and work, on the economies of countries and on the world. while we all welcome and embrace technological innovation, the acceleration in technology also brings with it newer challenges for financial services regulators, such as the central bank of bahrain. information technology has made possible the creation, valuation, and exchange of complex financial products on a global basis and, often, in real - time. as our banks increasingly engage in these technology - driven, i would urge them to take greater precautions in managing all the risks involved. the management of risk is an issue which the cbb takes very seriously, as demonstrated by our regulatory requirements and examination procedures, which we continue to review and upgrade, when ever necessary. as the financial sector relies more and more on technology, the issue of maintaining business continuity in the face of any kind of disruptions, we believe, is essential from a business and reputational perspective. effective from the beginning of this year, all banks in bahrain are required to maintain proactive business continuity planning that ensures delivery of critical services or products is maintained even during a disruption. ladies and gentlemen, i am sure you are all eager to see what the exhibitors have to offer. i thank you for joining us today and again extend my appreciation and thanks to the organizers and exhibitors. | 0.5 |
the undermined efficiency with which labor, capital, and other factors of production are allocated under conditions of lessened competition and more restricted access to global markets, thereby inhibiting the innovation process and the consequent gains in productivity, a fundamental driver of growth. in addition, higher trade barriers also hamper to a significant extent the international transfer of technology, know - how and best business practices, foundations on which emerging and developing economies are particularly reliant. to the above one must add the adverse effects on confidence and financial conditions. in this respect, it may be useful to note that one of the main reasons behind the stagnation of private investment in my country for a significant period already, is precisely uncertainty related to trade negotiations with the united states and canada. thirdly, notwithstanding weakened demand pressures arising from subdued levels of activity, inflation is likely to adjust to the upside under a more protectionist environment. further to the direct effects on imports prices brought about by higher tariffs, less competition from abroad in labor and goods markets pushes domestic prices and wages upwards, while the abovenoted efficiency losses on the supply side of the economy ( including those resulting from the potential disruption of gvcs ) should act in a similar way. in fact, we must not forget that the effect of international trade on competition and production costs is one of the major explanatory forces for the period of low inflation that we have seen at the global level in recent years. as noted earlier, the hard evidence that to date can be gathered regarding the impact of the ongoing episode of increased protectionism in the global economy is still scant. if any conclusion can be drawn, it is that said effects have been relatively small, albeit not insignificant and definitely not to be overlooked. emerging market economies ( emes ) have faced tighter ( and tightening ) external financial conditions over the last several months, which have translated into declining capital inflows and the consequent pressures on their exchange rates. in addition to specific, idiosyncratic factors that have been at play, especially in instances where episodes of acute stress have been present, this has reflected fundamentally the tightening of monetary policy by the federal reserve, in an environment of global uncertainty deriving from a combination of factors. obviously, a more restrictive trade policy stance in the united states and other countries has been one of them, although the extent to which this has affected different economies is varied. in this regard, it is again relevant to refer to the mexican experience | ) : β from protectionism to prosperity β, speech given at the northern powerhouse business summit, 5 july ; zornitsa kutlina - dimitrova and csilla lakatos ( 2017 ) : " the global costs of protectionism ", world bank policy research working paper no. 8277, december ; and organisation for economic co - operation and development ( 2016 ) : " the impact of changes in global trade costs ", box 1. 3 in chapter 1 of economic outlook, november. that a burst of protectionist actions would hardly take place in isolation. most likely, it would be accompanied by other negative events, such as currency wars, the implementation of inward looking policies in other areas and an additional backlash against globalization. in light of these considerations, it would be reasonable to take quantitative exercises like the ones described above as conservative estimates, or rough qualitative guides as to what we may face going down this path. indeed, it is difficult to understand why the world economy is again facing such high stakes, after the experience with protectionism during the great depression of the 20th century, and with the burden of the global financial crisis still present in many economies. | 1 |
international ramifications should be equally ambiguous if moral hazard is to be avoided. 48 in any event, liquidity a new but unwelcome form of ambiguity has emerged in the context of the asian crisis. the short - term liquidity requirements of a number of countries have been so great as to call into question whether the fund had adequate resources to restore confidence on the part of private creditors. for example, as of july 1996 the - 17 - support from the international monetary fund to sovereign borrowers must continue to be firmly linked to conditionality and the adjustment of domestic policies. moreover, support should be provided in such a way as to insure that all the parties whose behaviour contributed to the crisis ( both debtors and imprudent creditors ) pay some part of the costs. as for liquidity support to internationally active banks, the g - 10 governors have agreed that such support should be provided in the first instance by the homecountry authorities. however, this decision still leaves unclear whether the home authorities will be prepared to do so. the willingness of the bank of england to allow baring brothers to fail is a welcome indicator of this ambiguity. what is also unclear is the extent to which other national authorities might act to support the home authorities in different circumstances. the 1996 agreement between the federal reserve and the bank of japan, under which the bank of japan could obtain dollar funds through repo arrangements, gives some indication of the possibilities in this regard. given the scope, increasingly wide participation and regularity of the meetings which take place in basle, the bis makes an important contribution to international financial stability by ensuring that policy - makers ( at least central banks and other regulators ) know each other well and have open lines of communication. this is the institution β s most important contribution to crisis management, although not its only one. the international community ( in particular the central banks of the g - 10 countries ) have often found it appropriate to provide bridge loans through the bis to countries in financial difficulties which are awaiting the receipt of funds from the imf, the world bank or other such bodies. such bridge loans often provide needed liquidity, are an indication of international support for the policy changes normally associated with fund programmes, and ensure a continuing central bank involvement in the process of crisis management. while this role might be thought less important in the future, given that the fund can now disburse much more rapidly than before thanks to the new emergency financing mechanism, some possibilities still remain open | do with the instruments used in the pursuit of those objectives. let me elaborate. the macro - prudential objective can be defined as limiting the costs to the economy from financial distress, including those that arise from any moral hazard induced by the policies pursued. one could think of this objective as limiting the likelihood of the failure, and corresponding costs, of significant portions of the financial system. this is often loosely referred to as limiting β systemic risk β. in contrast, the micro - prudential objective can be seen as limiting the likelihood of failure of individual institutions. again, loosely put, this means limiting β idiosyncratic risk β. so defined, this objective is in turn probably best rationalised as a means of protecting depositors. an obvious implication is that the macro - prudential dimension focuses on the risk of correlated failures, pays great attention to those characteristics of an institution, such as size, that determine its significance for the economy, and regards peer - group analysis as less relevant, or potentially misleading, unless tied to an institution β s systemic role. after all, deviations from average behaviour assume that the average is correct. the micro - prudential dimension, by contrast, considers each institution in its own right, is thus not concerned with correlations per se and views peer - group analysis as a natural monitoring tool. to bring out the contrast, think of the financial system as a portfolio of securities, ie the individual institutions. the macro - prudential perspective would focus on the overall performance of the portfolio ; the micro - prudential vision would give equal and separate weight to the performance of each of its constituent securities. compare, for instance, the solvency standard that might be appropriate from a macro - prudential perspective with that which would be consistent with the micro - prudential objective i have sketched. by solvency standard i mean, for simplicity, a target probability of insolvency. first, the macro - prudential solvency standard for individual institutions would be calibrated with reference to their systemic significance ; its micro - prudential counterpart would be uniform for all. second, the macro - prudential standard for the system as a whole would be derived from a top - down approach, based on a view of the likelihood and costs of a systemic crisis. this, in turn, would inevitably imply a judgement about the possible correlation of financial difficulties among institutions. the corresponding micro - prudential standard would be derived | 0.5 |
sportsperson to want to join the champion β s league as soon as possible, this person might sometimes be better off taking a bit more time for training in order to further develop and strengthen his talents in a favourable environment. when he joins the champions league team, the rules are strict and the flexibility for playing one β s own strategy is limited. this might dampen his performance. coming back to the euro area, i am convinced that the various stages of the road to the euro as stipulated by the maastricht treaty can offer talented aspirants excellent β training opportunities β to perform even better at a later stage. experience with the new member states on their way to adopting the euro let me now turn to the experience that the new member states have made so far on their way to the euro and look at whether any lessons can be drawn from them for bulgaria. i would like to touch upon basically three issues that in my view are of key importance for the new member states with respect to their euro adoption plans, namely to preserve price stability, to advance with real convergence and to conduct sound fiscal policies. β’ let me start with the need to achieve and maintain price stability. price stability is an essential requirement for a successful monetary integration process. at the same time, it could contribute to a more rapid catching - up process in real income levels by fostering trade and investment. where do countries currently stand with respect to price stability? the new member states have made significant progress in terms of disinflation in the past years, by bringing their average inflation rates close to that of the euro area. yet, inflation developments in the new member states continue to be rather volatile and diverse across countries. following a substantial rise in inflation in the course of 2004, from on average 1. 9 % in 2003 to 4. 1 %, inflation moderated again to 2. 5 % in 2005. the pick - up in 2004 was mainly driven by factors related to eu accession [ such as higher food prices and increases in indirect taxes and administered prices ] and the strong increase in world energy prices. looking ahead, while in some countries inflation is currently below the euro area level, inflation dynamics require high vigilance in some of the fastest growing countries. this brings me to the issue of real convergence. the process of real economic convergence of the new and future member states such as bulgaria to the euro area, i. e. their catching - up in standards of living with those of the euro area, | , annual hicp inflation was 2. 2 % in december, down from 2. 3 % in november and 2. 5 % in october. over the short term, annual inflation rates may again increase somewhat, reflecting in particular renewed increases in energy prices and some base effects. looking further ahead, indirect effects of past oil price rises on other components of the price index may gradually materialise, and already announced changes to administered prices and indirect taxes can be expected to have an upward impact on hicp inflation. meanwhile, wage dynamics have remained moderate over recent quarters and are assumed to remain so for the time being, reflecting, in particular, global competitive pressure. all in all, currently available information is broadly in line with the scenario embodied in the december 2005 eurosystem staff projections for hicp inflation over this year and next. risks to this outlook for price developments remain on the upside and include further rises in oil prices, a pass - through of oil prices into consumer prices stronger than currently envisaged, additional increases in administered prices and indirect taxes, and β more fundamentally β potential secondround effects on wage and price - setting behaviour. it is therefore crucial that the social partners continue to meet their responsibilities also in the context of a more favourable economic environment. turning to the monetary analysis, the annual growth rate of m3 remains robust, even though it moderated further in december. this moderation can be explained in part by an apparent resumption of the unwinding of past portfolio shifts, which exerts a dampening effect on headline m3 growth. however, the trend rate of monetary expansion remains strong, reflecting the stimulative impact of the prevailing low level of interest rates. in particular, growth in the most liquid components of m3 continues to be very robust and the annual growth rate of loans to the private sector has increased further. mortgage borrowing is particularly buoyant, implying a need to monitor developments in the housing market closely. overall, strong monetary and credit growth in a context of already ample liquidity in the euro area points to risks to price stability over the medium to longer term. to sum up, the economic analysis suggests that indirect effects stemming from past oil price rises and already announced changes to administered prices and indirect taxes can be expected to have an upward impact on annual hicp inflation over the coming years. it also indicates that risks to price stability over the medium term remain on the upside. cross - checking the outcome of our economic analysis with that of our monetary analysis | 0.5 |
shocks, hicp inflation has been above - and sometimes significantly above - 2 % for quite some time. but inflation always bounced back following these shocks and today the outlook for price stability is once again favourable. a second related point i would like to mention is the medium - term orientation of our policy. as a central bank, we only affect prices with long lags and we cannot steer trends in prices with high precision. our focus on the medium term helps to avoid overly ambitious attempts to fine - tune inflation developments. you might ask what β medium term β means exactly. it is certainly not a fixed time horizon, as some have argued. experience in recent years has taught us that flexibility in this respect is very important. from this point of view, the ecb β s monetary policy strategy is different from pure forms of inflation targeting. this leads me to my third issue, which is that one cannot simply rely on a single inflation forecast to conduct monetary policy successfully. experience suggests that it can be very misleading to summarise the assessment of medium - term inflationary pressures in one single figure, even when a measure of statistical error is attached to it. unfortunately, monetary policy is not so simple and the repeated significant forecast errors by all major institutions over the last few years provide evidence of this. indeed, i agree with alan greenspan who once said that central bankers should be less reluctant to admit that they sometimes do not know. instead of relying on a single forecast, our monetary policy strategy emphasises this fundamental uncertainty. our strategy builds on several forecasts and indicators and includes a cross - check of the information from the economic analysis, which is relevant from the short to medium - term perspective for inflation, with that from the monetary analysis, which is important for the medium to long - term outlook. in this respect, the fourth point that i would like to discuss today is that over the last few years we have seen that monetary analysis is not only an important, but also a complex business. i have no doubt that inflation is a monetary phenomenon over the long term and that we are right in attributing a prominent role to monitoring monetary developments in our monetary policy strategy. a fifth point i would like to make is that it was difficult to gauge the effects of global interdependencies when we began to conduct the single monetary policy. what we have learnt, in particular, is that global linkages go well beyond the international trade channel, which was traditionally considered to be the main, | recession should take a more forceful orientation to stimulate consumption or a more prudent approach to discretionary fiscal policy making. in my view, while the operation of automatic stabilisers, whose impact on activity, income distribution and the sustainability of public finances is reasonably well understood and comparatively easy to predict, discretionary changes β particularly if they are temporary β have mostly a short - living effect on demand. the carscrapping schemes implemented in several countries are a good example. schemes geared towards car purchases certainly stimulated demand in a period of high uncertainty. but such influence has not affected the underlying trend of demand of automobiles. in chart 5, which shows the level of car registrations in the euro area, germany and spain illustrates that indeed car sales have benefited initially from these schemes. however, it is also visible that the increase of demand for cars was mostly an anticipation of future demand. it may however have contributed to the swift recovery of the industry. so far i discussed the main determinants of private consumption demand on a euro area aggregate level. let me, however, also mention that the aggregate developments in the area mask heterogeneous and even divergent changes in different member countries that have been subject to shocks of a diverse nature. chart 6 shows that, while the downturn of retail trade was a common feature of most euro area countries, there were significant differences across countries between the levels of retail sales in 2010q2 compared with the time just before the financial crisis in the autumn of 2008. although it is clear that retail sales have contracted in most countries, it is also clear that differences across countries are quite significant. [ the volume of retail trade in greece, for instance, stood almost 20 % below its level in 2008q2, which compares with a fall of 2. 0 % in the euro area as a whole. ] before coming to an end, let me touch on my final question on the future outlook of the overall economy and consumption and retail in particular. [ slide 7 ] recent statistical releases and survey evidence continue to be consistent with the picture of a positive underlying momentum of the recovery in the euro area. the global recovery is expected to continue. at the same time, private sector domestic demand should gradually strengthen further, supported by the accommodative monetary policy stance and the measures adopted to restore the functioning of the financial system. however, the recovery in activity is expected to be dampened by the process of balance sheet adjustment in various sectors. we expect private | 0 |
##es of 3. 5 per cent of gdp and 2 per cent thereafter. clearly the lower surpluses imply a smaller fall in the debt - to - gdp ratio and higher gross financing needs. however, the smoothing of interest can mimic the baseline high surplus case both on the path of the debt - to - gdp ratio and in terms of gross financing needs. on the basis of the definition of sustainability agreed by the eurogroup, the debt is sustainable since gross financing needs remain under 15 per cent of gdp in the medium term and under 20 per cent in the long term. this exercise is indicative of how even a mild debt relief can have significant effects on the debt profile. of course, were the interest smoothing accompanied by higher growth, as a consequence of lower primary surpluses, then the debt - to - gdp profile and gross financing needs would be even more favourable. alternatively if interest rate smoothing were to occur and the costs shared equally between greece and the esm, this would also lead to more favorable outcomes. 15 / 23 bis central bankers'speeches the euro area : steps taken to address the crisis and to strengthen the governance of emu let me now turn to the issue of the euro area and the steps that have been taken to address the sovereign debt crisis. the ecb forcefully lessened country risks in 2012 with the announcement of unlimited outright monetary transactions ( omt ) and the signal sent by ecb president mario draghi that the ecb would do β whatever it takes β to preserve the euro. more generally, the ecb has been addressing the severe and persistent disinflationary forces in the euro area with a broad set of standard and non - standard monetary policy measures. to a great extent, these measures have helped to improve financial conditions and boost the recovery in the euro area. macroprudential policy tools are also now available to secure financial stability. after the ad - hoc greek loan facility that financed the first greek bailout programme in 2010, the euro area set up the european financial stability facility ( efsf ) to provide financial assistance to distressed member states. the efsf was replaced by the more powerful european stability mechanism ( esm ) in october 2012. in response to the strong negative feedback loops between banks and sovereigns as well as contagion among national financial markets, european leaders, in 2012, initiated the banking union. its three pillars are : the single supervisory mechanism, the single resolution mechanism and the still - to - be completed common deposit insurance | 11 / 23 bis central bankers'speeches what about the longer - term economic outlook? labour force dynamics will support potential growth in the medium term. but in the long run, growth will come from increased productivity. in this respect, structural reforms will unleash the growth potential of the greek economy, with the oecd estimating that the impact of implemented and planned reforms over 10 years would be to raise output by 13. 4 per cent. analysis done by my colleagues in the bank provides a baseline scenario for a rebalancing of the economy from the demand side that has the following characteristics. consumption as a percentage of gdp declines by around 10 percentage points, moving closer to the euro area average. investment and exports fill the gap in domestic demand. from the supply - side, i have already noted the rebalancing towards tradables, supported by the shift in relative price inflation since 2010. 12 / 23 bis central bankers'speeches the bank of greece has recently made a number of proposals in the area of fiscal policy and government debt which would go a long way to securing the performance outlined above and reducing these stock imbalances. firstly, there is the issue of the fiscal mix. to a significant extent, the overperformance of fiscal policy relative to target in 2016 was due to increases in tax rates β both indirect and direct tax rates along with social security contribution rates. this emphasis on taxation needs to be reduced since it stifles growth, increases unpaid debts of the private sector towards the public sector and encourages tax evasion and undeclared employment. rather emphasis needs to be placed on restraining and restructuring non - productive spending and making more effective and efficient use of the public sector β s assets, especially land. second, there is the issue of the fiscal target. according to estimates from the bank of greece, a lowering of the general government primary surplus target from 2021 onwards to 2 per cent of gdp, from the 3. 5 per cent that is envisaged now, would be consistent with debt sustainability if combined with some mild debt relief measures and structural reforms to raise potential growth. the easing of the primary surplus targets, together with the implementation of the agreed structural reforms, would put the necessary conditions in place for a gradual lowering of tax rates, with positive multiplier effects on economic growth. finally, there is the issue of what debt relief measures. the short - term measures decided at the eurogroup meeting of the 5th of december last year are | 1 |
market disruptions, impedes economic resiliency, and limits the world β s ability to realize the full potential of the rise in global productivity to lift standards of living. | donald l kohn : the united states in the world economy speech by mr donald l kohn, member of the board of governors of the us federal reserve system, at the federal reserve bank of atlanta β s public policy dinner, atlanta, georgia, 7 january 2004. * * * no public policy issues facing the united states today in the economic realm are more important or prominent than those that touch on our place in the world economy. the greater attention to global economic issues is partly just a natural byproduct of the increasing interdependencies of all national economies. but this focus has been accentuated of late by the potential effects of two trends that have intensified in recent years. one is the emergence of several developing countries - most prominently china and india - as global economic forces and the consequent reorganization of production processes and change in the nature and location of jobs here and abroad. the second is our burgeoning trade and current account deficits and the possibility that they cannot be sustained at these levels. like most interesting policy issues, these are difficult and complex, and they therefore carry a considerable risk that policy prescriptions will be ineffective or even counterproductive. 1 the two developments are related, but only to a limited and indirect extent. importantly, they arise from very different underlying sources. job reorganization results from the integration of china and other developing countries into the world economy. the increase in our current account deficit has numerous roots, including, most prominently, stronger growth here than in our trading partners. but trade and exchange rate relationships with emerging - market economies are a small part of the story. the deficit does mean that the united states has been spending more than we produce, and the rest of the world has done the opposite. because they have different causes, these developments have different public policy implications. their implications for federal reserve policy are indirect. we cannot affect the pace of job restructuring nor correct the current account deficit, and that limitation is important to understand. nonetheless, how these phenomena evolve and how they are addressed are critical background factors for us as we conduct monetary policy. they can influence the balance of aggregate supply and demand and the functioning of the economy - its flexibility and resiliency and its capacity to advance standards of living. let β s look at these developments separately. job restructuring i think it is useful to look at job restructuring as the adaptation to a much larger development - a huge increase in global productive capacity. the major increase in global productivity has two main causes | 1 |
however, in the medium term the sources of financing of the european economy should become more diversified, so the action plan for capital markets union ( cmu ) should be ambitiously pursued. a further challenge that accompanies the current recovery is, in addition to new waves of the pandemic, asymmetry between sectors and countries. this issue is partly addressed by the recovery and resilience package known as the next generation eu. the package has not only been designed to boost aggregate demand in the medium term but also addresses longer - term challenges such as greening of the economy, europe's lag in digitalisation, country - specific structural challenges and 2 / 3 bis - central bankers'speeches economic resilience in general. the package has been designed to channel more resources to vulnerable, most affected countries. the success of the package is important not only for increasing aggregate demand and strengthening long - term economic potential, but also for the possibility of future use of such a solidarity mechanism of financing investments and reforms. further progress in european fiscal integration would be welcome, but this should go hand - in - hand with fiscal prudence and reduction of risks. to strengthen economic and financial resilience, action is urgently needed in various areas, not just economic ones, which is an important lesson from this health crisis. in addition to lowering the risk of future pandemics, which could otherwise emerge more often than in the past, we need to address more consistently the risks related to climate change. governments and parliaments have a key role to play, but we should also contribute to the efforts, each institution within its own mandate. at the eurosystem, we are gradually incorporating this ambition into various areas of activity, from monetary policy and management of the non - monetary portfolio to banking supervision and monitoring financial stability. the pandemic crisis has accelerated digitalisation, which also represents a path to faster recovery. as our lives become increasingly digital, be this in terms of interpersonal communication, finance or health services, we are becoming more vulnerable to cyber attacks, which continue to spread and are becoming more sophisticated. efforts need to focus not only on protecting critical infrastructure, but also on raising wider societal awareness and a culture of cybersecurity. * * * the topics i have touched on will be discussed in the panels of this forum. so let me conclude with a final thought that the decisive and well - coordinated response of national and eu economic policies to the pandemic shock has revealed | exceptionally accommodative after coping with the lengthy period of deflationary pressures and the pandemic shock. let me now turn to inflation, the key variable of our monetary policy. a series of supply - side disruptions and a rapid recovery in global demand have pushed inflation significantly above our medium - term target of 2 %, after almost a decade of too - low inflation. this might not necessarily be an undesirable development, if the reasons behind the pick - up in inflation were about to fade soon, bringing inflation swiftly to its target. however, inflation expectations have adjusted and shifted upwards, with financial market and consumer survey indicators pointing to inflation between 2 % and 3 % in the medium and longer - term. 2 moreover, expected inflation is becoming an important element in price setting in euro area firms, as shown by the ecb survey. 3 high inflation β coupled with labour market tightness - has also triggered calls for higher wage rises. the ecb's experimental wage tracker so far points to a moderate increase in wage growth in this year and the next, below the projected inflation in the euro area. however, the longer the high 2 / 5 bis - central bankers'speeches inflation rates persist, the likelier it is that they will be transmitted to higher wage growth and potentially lead to a wage - price spiral. in the medium term, therefore it seems possible that inflation will settle at higher levels than we have observed in the recent years, even after the existing supply shocks fade. we could face a switch to a higher inflation regime, as some of the drivers of past deflationary pressures have lost steam, such as global trade liberalisation and the integration of low - wage chinese workers to the global economy. at the same time, some structural inflationary factors are gaining momentum, namely the green transition, strengthening of the eu's strategic autonomy and the reorganisation of global supply chains with possible nearshoring. there will still be some deflationary forces at play, such as rapid digital transformation, other innovation and elevated debt levels, but there is a question as to whether these could overcome the inflationary forces. let me now turn to monetary policy. given the high inflation in the euro area, reaching 8. 1 % annually in may and ranging from 5. 4 % in malta to 20. 1 % in estonia, together with strengthening inflation expectations, we need to make further steps towards normalisation of our monetary policy. after we ended net asset purchases under the | 0.5 |
. we, at the central bank, find ourselves at the intersection of these two worlds, pulled in both directions and predictably unable to satisfy both constituencies for long. we have to make sure you are improving your bottom line, but not at the expense of anybody else or of the country at large β that is our mandate : price stability in the context of balanced and orderly economic development. bis central bankers β speeches if we just read the world press, and inhale β a practice which is not recommended on health grounds β mauritius looks to be doing rather well. but this should be a wake - up call for skeptics. well done, all you directors here. all of you in your own separate ways, in companies, big and small, have all become part of that world - famous mauritius success story! on this subject, i have been reminded by a colleague of the wise words of adam smith, the grandfather of free - market economics, when he observed : β people of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices β for β prices β, read directors β pay or ceo β s remuneration, or share issues to the board and the management. to complete his observation on the cupidity of the world, adam smith added this cool assessment of the prospects for regulation : β it is impossible indeed to prevent such meetings ( of people in a common trade ) by any law which either could be executed, or would be consistent with liberty and justice. β such, indeed, is the dilemma that we, regulators, face in searching to improve our systems of international, regional and national management of the financial industry and how best to regulate and supervise a deeply - flawed market which is falling into moral hazard. yet, mauritius seems to have done rather well. the financial sector has largely escaped from the fallout from the great crisis and is expected to remain solid, resilient, profitable and financially stable. i see many of our ceo β s from banks here and i β d like to congratulate them for a job well - done. but that does not mean that they managed it on their own. we at the bank did our best to keep them on the straight and narrow path. as i hinted earlier, if you have only self - regulation, you can be easily tempted to stray from that in the search of greater profits and greater returns for your | gentlemen, let me introduce to you for the first time in our history the 35th anniversary commemorative k2. 00 circulation coin. alongside it is the commemorative k2. 00 note which will circulate concurrently. another historical introduction is the new 35th anniversary 50t circulation commemorative circulation coin which has the bank logo in red on the back. a new look k50. 00 banknote is also launched. it has new security and design features which now standardizes the features with the other banknotes. | 0 |
diversify products and markets. 7. my own personal experience at the bank the uncertainty and instability prevailing in the global economic and financial environment have kept me on my toes. it was a path full of challenges that confronted me, a path strewn with obstacles where i sometimes stumbled and where i found myself, like many fellow - governors elsewhere, regularly attacked, sometimes ridiculed, and even scorned. but i always emerged, often bruised, but more determined than ever, motivated by the unchanging desire to rise to the constantly - changing challenge, raise the profile of the bank, and transform it into a modern and innovative institution that fulfils its mission confidently and efficiently for the sustainable development of the mauritian economy. we had our share of achievements, small victories and successes obtained with great satisfaction. 8. the decisions and actions that i took at the bank over the last five years have been directed towards maintaining financial and macroeconomic stability β this, as the global financial crisis revealed, is the most important function of a central bank. this overriding consideration has guided all my decisions and actions. however, given the highly uncertain and unstable global environment, flexibility and promptness in action turned out to be key elements in our decision - making. i saw the need to bring some key reforms to the organisational structure of the bank. for operational efficiency, the bank was restructured into a more flexible institution. new divisions were created to monitor areas that i had foreseen would be critical in the years to come, among which the financial stability unit to monitor and assess the risks to financial stability and associated macro - prudential policy. our strategies have borne fruit and the bank β s contribution to financial and macroeconomic stability has been recognised locally and internationally. 9. let me sketch the broad outlines of the bank β s policies and actions during the past five years, which flow from this overriding consideration. 10. monetary policy at the very start of my tenure as governor, i set out to remedy what was, to my mind, a major flaw in our approach to monetary policy decision - making. although it had been three years since the new bank of mauritius act had been enacted, with explicit provision for the creation of a monetary policy committee ( mpc ), the interest - rate decision process had remained unchanged. one of my first moves as governor was to establish this committee, which was officially launched in april 2007. soon after the first meeting, i proposed that amendments be brought to | aware that spill - over effects and contagion increase with financial integration. so, it will probably be a major challenge in the coming years to accurately gauge this dimension, as borne out by the growing importance of cross - border financial institutions. in recent weeks, when the financial turbulence was at its fiercest, it became clear that a revamp of prudential supervision in europe will be an essential element of the reforms necessary to avoid a repetition of such a dramatic turmoil. finally, by encouraging more efficient allocation of resources, financial integration acts as a prerequisite for realising europe's full economic potential, that is raising the potential for stronger non - inflationary economic growth, as highlighted in the lisbon strategy. for all these reasons, the eurosystem has always been a strong supporter of the european financial integration process and we have monitored developments in the different segments very closely. the tenth anniversary of the ecb, a few months ago, gave us the opportunity to take stock of the achievements in european financial integration over the last decade. we were proud to conclude that significant progress has been made and that the single currency has acted as a major driving force. the progress that has been achieved nevertheless differs across market segments. the money market, in particular the interbank market for unsecured deposits, can be considered as a single area - wide market β also its current difficulties ignore national borders! but the segment for short - term debt securities ( commercial paper and certificates of deposit ) is still fragmented. i would like to remind you that, in order to try and close this gap, the eurosystem is supporting the private step initiative which aims to develop a pan - european short - term paper market. a considerable degree of integration has also been achieved in corporate bond and equity markets. by contrast, while the euro - area banking markets for wholesale and capital - marketrelated activities also show clear signs of integration, retail banking markets have so far remained fragmented. undoubtedly, the euro - area government bond market is the segment β apart from the unsecured money market β that has reached the highest degree of integration. the removal of exchange rate risks, the drop in transaction costs and the disappearance of currency restrictions for investors and intermediaries have pushed up cross - border bond holdings. let me mention the case of my own country. at the end of june this year, the proportion of belgian linear bonds held by foreigners reached 55 p. c. in the case of treasury certificates, foreign holdership came | 0 |
too. thus, in the initial stages of evolution of oversight structure for regulation and supervision of payment and settlement systems, a greater attention may be given to systemically important payment systems ( sips ) as compared to retail payment systems, for obvious reasons, especially as these sips usually handle payments of large value and settlement of inter - bank transactions emanating from financial markets pass through such systems. however, as regulatory attention on these large value payments get stabilised and simultaneously developments in retail payment mechanisms evolve, the span of oversight attention widens to encompass these systems as well. let me briefly highlight some of the issues that merit attention in the context of retail payment systems. i am not sure whether a standard definition of β retail payment system β has been given anywhere, but a reference to the β glossary of terms used in payment systems β ( by cpss β committee on payment and settlement systems ) shows that β retail payments β are defined as mainly consumer payments of relatively low value and urgency. accordingly, β retail funds transfer system β is defined as a β system which handles a large volume of payments of relatively low value in such forms as cheques, credit transfers, direct debits, atm and eftpos ( electronic funds transfer at point of sale ) transactions. even going by this working definition, what clearly emerges is that the user base for retail payment systems is very large as they touch every economic activity in the country and even cross - border transactions of such nature. in terms of volumes, paper - based and electronic retail payment systems far exceed the large value payment transactions, while they may be lower in terms of value. efficient retail payment systems bring in operational efficiencies for all commercial activities and greatly facilitate e - commerce. recent developments in payment systems, aided by developments in information and communication technologies, have provided customers with a wide array of choices, demanding greater levels of efficiency and safety in their operations. further, final settlement of transactions from many of these retail systems may also occur in one or the other large - value payment systems, increasing their systemic importance. thus, such retail payment systems, even though they are not sips, can be aptly called as systems of system - wide importance. oversight arrangements of such systems should, therefore, not lose sight of this relevance of retail payment mechanisms in the larger economic context. the presence of a sound legal framework greatly enhances the efficacy and efficiency of the oversight function. in india, we have recently enacted the payment & settlement | customer identification and kyc purposes, providing low - value one - toone transfers on a 24x7 basis, etc. giving a logical direction to settlement finality in netsettlement systems by examining guaranteed settlement is yet another thought process. ladies and gentlemen, you would agree with me that the host of issues that revolve around the retail payment systems cannot be addressed in a matter of few minutes. all that i have attempted is to draw your attention to the important issues that any regulator needs to be conscious about. i am sure over the next three days some of these issues may see solutions emerging with your active participation. at the end of the seminar, let us all hope to carry with us sufficient knowledge to steer the course of the retail payment systems not just within our jurisdictions but also strive to harmonise the efforts of retail payment activities across jurisdictions. let me conclude by quoting what leonardo da vinci had said β β i have been impressed with the urgency of doing. knowing is not enough ; we must apply. being willing is not enough ; we must do. β what was true then is equally applicable today. i wish you all the very best and happy deliberations. | 1 |
. prudential supervision itself will focus more sharply on the financial institutions supervised. in itself, better registration of β true β variability is not destabilizing ; quite the contrary. in any case consideration is being given to the idea of applying prudential β filters β in calculating supervisory capital that can attenuate improper volatility in the accounts due to the repercussions of fair - value accounting. c ) the transposition of the new methods the extent to which the aims are actually attained will depend on how well the banks make their preparations. but it will also depend on the adaptation of economic legislation. for banks the change will be profound, at once technical and cultural. from valuations and decisions still largely based on deterministic values, singlevalue variables and the simple β summing up β of individual items they will move towards widespread use of both objective and subjective probability distributions. the next step will be even more towards considering portfolios as a whole and taking account of the linkages between asset and liability values, the structure of the balance sheet and immunization strategies. it will be less and less common for overall risk to be calculated by adding up the risk of the individual components. italian banks are readying themselves. the banking groups that will use advanced internal rating methods from the outset have initiated an especially intensive interaction with the supervisory department of the bank of italy. basel 2 and ias also constitute an additional reason for adapting italian law to the needs of a modern β regulated market economy β. albeit in different ways and to a variable extent, three fields of economic legislation will be involved : company law, competition law and bankruptcy law. italy β s recent company law reform is now filtering into the concrete reality of firms and banks. the legislation on banking has been coordinated with the civil code by legislative decree 37 / 2004. the implementing regulations will follow soon. the aspects on which the bank of italy has focused in helping banks to interpret the new company law are a more general notion of equity interest, adaptation of the requisites for bank officers and above all the duties and responsibilities of the board of directors and control bodies in the traditional and new models of governance. for basel 2 and ias to have the desired effects, the independence granted to directors β notably in the revised articles 2381 and 2392 of the civil code β must be accompanied by strengthened internal and external controls on operations and accounts. in applying the legislation intended to safeguard and foster competition in banking, even | β. this afternoon the focus shifts to central bank operations from a technical perspective β presented by representatives from the european business school in oestrich - winkel. the third session begins at two o β clock when the frankfurt school of finance and management will analyse in more detail β current and international challenges β faced by central banks. frankfurt is the ideal place to promote central banker education β and not just because of its geographic location in the heart of europe. as the home of two central bank β s, the deutsche bundesbank and the european central bank, frankfurt lives and breathes the single currency. but what does this mean for education? central banks produce knowledge in such wide - ranging areas of central banking as monetary policy, cash management and payments. however, practical knowledge is mainly only available and applicable within central banks, which is only to be expected because central bank operations are very different from those of a β normal β bank. for the bundesbank, as the β bank of banks β, this also has an impact on recruitment channels. the bundesbank thus provides training programmes for all career paths as it is generally not so easy to find a sufficient level of central bank knowledge on the market. for us, this means that knowledge has to be transferred internally. for instance, we bring in many of our employees from a wide variety of business areas to teach at the bundesbank β s own university of applied sciences in hachenburg, where we train the next generation of our central bankers. it is of particular importance to us to communicate practical experience ; as the german writer wolfgang eschker once said β practically speaking, we can save ourselves a lot of theory β. it is precisely just the financial crisis that has shown us that it can be necessary, even in such a sensitive environment as central banking, to roll up our sleeves and face new challenges with a hands - on, goal - oriented approach. we believe that on - the - job further training is essential and, once again, we call almost exclusively on the services of our own internal specialists. after all, we have to ensure that our members of staff are kept up - to - date with the latest knowledge and that they have the opportunity to develop their soft skills. there are many factors behind the constant changes and increasing complexity and thus growing requirements : political decisions, such as establishing monetary union, the advance of globalisation and new technical innovations all require a continual examination of brand new processes and a high degree of mental flexibility | 0 |
still generates important financial 3 and trade 4 spillovers. as a group of countries tightens monetary policy, their currencies can appreciate and potentially generate inflation spillovers to the countries on the other side of that appreciation 5. in the case of a global inflationary shock, it is important to avoid β reverse currency wars β as countries seek to escape inflationary depreciation. but coordination does not mean that the pace of monetary tightening must be equal across all economies, as each has its own specificities. for example, relative to the us, fiscal policy has been less expansionary across eurozone economies, and the euro area also features a stronger predominance of bank credit relative to market credit, which can be important for the transmission of monetary policy. 6 but monetary policy works also through market expectations of future policy rates, which can change quickly and are formed within a global market, creating an additional channel for spillovers. when one central bank makes a move, markets β attention turns to its peers in search for cues on their likely next decisions. indeed, there are strong mutual interdependencies between us and euro area yields over time : going beyond simple correlations, estimates based on granger - causality tests suggest that causality runs both ways ( figure 2, slide 3 ). interestingly, this two - way causality holds for rate expectations at short to medium term maturities β the typical monetary policy horizon, as shown by figure 2 ( slide 3 ) ; and at longer maturities, causality mainly runs via the term premium. the latter is consistent with the dominance of global macro - financial factors as drivers of the term premium component of long - term rates. while spillovers between the us and the euro area are mutual, their intensity is asymmetric. 7 us factors explain a larger share of variations in euro area yields schmidt, j., caccavaio, m., carpinelli, l., marinelli, g. ( 2018 ). international spillovers of monetary policy : evidence from france and italy, " journal of international money and finance. london, m., silvestrini, m. ( 2023 ) us monetary policy spillovers to emerging markets : the trade credit channel. berthou, a., schmidt, j. ( 2022 ) exchange rate pass β through to import prices in france : the role of invoicing currencies, bulletin banque de france 242 / 6. alder, | ##inish the binding nature or the efficiency of the pact. let me conclude by mentioning how much we have achieved in europe over the last fifty years. the eu has reached a diversified but, broadly speaking, very ambitious level of integration : it is complex because the degree of integration is largely dependent on which areas are at stake, it is ambitious since, in some areas precisely, the system is completely integrated and relies on one single policy. the euro, in that regard, is both the symbol of our achievements and our best hope for the future of european integration. thank you. | 0.5 |
budi mulya : exit strategy in advanced countries and their implications for the emeap region remarks by mr budi mulya, deputy governor of bank indonesia, in the 6th executives β meeting of east asia - pacific central banks ( emeap ) monetary and financial stability committee ( mfsc ) meeting, chiang mai, thailand, 14 november 2009. * * * let me start by commending dr. krishna srinivasan and dr. eli remolona for the excellent presentations on this very timely and important issue. a vast discussion on exit strategy has been hovering around us recently, which involve so many ways and aspects. however, today, i will focus on three main aspects ; first, the strategy itself ; second, the implications it will bring ; and third, the challenges it will leaves us with. the strategy for exit let me begin with the first part : the strategy for exit. the biggest challenge is determining the timing to exit. on this issue, i believe we share the same understanding that it will depend on the state of the economy and the financial system of a country. nonetheless, given the still uncertain and fragile global economic recovery, especially those of the advanced economies, i have a conviction that we should err on the side of further supporting demand and financial repairs. accordingly, the exact answer would be don β t rush. in relation to this, it is always relevant to ask about the authorities β commitment, especially the fed, to err on the side of being too late, rather than too early, in starting their tightening cycle. the next issue is the sequence of exit. in this respect, the complexities lie on the interaction between fiscal vs. monetary, and conventional vs. unconventional policy. it is relevant for us to ask which one will come first. should credible commitments to mediumterm fiscal consolidation precede monetary tightening? would withdrawal of current extraordinary liquidity support and deposit guarantee accelerate or offset monetary tightening? similarly, should central banks raise interest rates before they unwind unconventional monetary policies, or the other way around? in this respect, let me recall that the g20 recommends that central banks can raise interest rates before they dry up liquidity. however, let me also balance this view with the fact that abundant liquidity inside the system tends to impede any central banks attempt to raise short term interest rate, like the one occuring in the us. thus, credibility would be the issue. how to exit is another issue | yi gang : speech at bank of thailand - bank for international settlements conference speech by mr yi gang, governor of the people's bank of china, at the bank of thailand - bank for international settlements conference " central banking amidst shifting ground ", bangkok, 2 december 2022. * * * distinguished governor sethaput suthiwartnarueput, general manager agustan carstens, president christine lagarde, governor philip lowe, governor perry warjiyo, professor raghu rajan, good morning! on behalf of the people's bank of china, i would like to extend my sincere congratulations to the bank of thailand on its 80th anniversary. it gives me great pleasure to speak at this conference. i would like to take this opportunity to say something about growth and inflation. i recall that about one or two years ago, we were still debating whether the inflationary pressure was transitory or entrenched. since the beginning of this year, however, most advanced economies started tightening monetary policies. many central banks are hiking interest rates aggressively at a much faster pace than previous tightening cycles. and also, many emerging markets and low - income countries have seen pressures of local currency depreciation, capital outflows and inflation at the same time. meanwhile, indicators such as mortgage rates and pmis throughout the world show that the likelihood of a slowdown or a recession sometime next year is on the rise. central banks are faced with a delicate balancing act of fighting inflation and keeping the economy growing at the same time. as for china, our cpi right now is about 2 %. this is particularly due to a bumper harvest in grain and stable energy prices. our gas and oil prices follow global trends. our electricity prices have basically been stable since the beginning of the year. looking for next year, the inflation forecast is in the moderate range. china's growth rate, however, is right now somewhat slower than expected due to covid and other factors. our third quarter growth rate is 3. 9 % on a year - on - year basis. but as you see, we have a pretty accommodative monetary policy in place to help with economic recovery and maximize employment. and our focus is growth right now. we recently cut the required reserve ratio ( rrr ) by 25 basis points, and also led the market interest rates lower a little bit. on top of its aggregate dimension, our monetary policy also has a structural side that is providing much needed support to | 0 |
the financial and economic turmoil, in particular after the lehman insolvency. however, this was the case in most member states, and so the reasons why only some of them suffered a serious loss of market participants β confidence in their capacity to bear the debt burden lie further in the past : in these countries, fiscal and economic policy omissions in the years before the crisis led to an accumulation of explicit or implicit liabilities in the state β s budget and a significant loss of competitiveness. consequently, the driving forces behind the increase in perceived sovereign risk were not speculative forces on the financial markets but poor fundamentals. when the loss of confidence culminated for the first time in may, comprehensive support measures for greece β where the situation was particularly dire β were taken to avoid risks for the stability of the euro area as a whole. financial support was tied to a tough, closely monitored adjustment programme aimed at restoring the sustainability of public finances in greece. in addition, a rescue scheme financed by the imf, the european union and its member states was set up to deal with future intensifications of the crisis. again, financial support is granted only if a member state undergoes a tough adjustment programme that secures public solvency. this conditionality is crucial : financial support can buy some time, but confidence in the sustainability of public finances will only return if substantial structural improvements in the respective countries β be it in greece or in ireland, which called for support from the efsf, efsm and imf in november after the fiscal burdens related to supporting its oversized financial sector became overwhelming. for the financial system β s future stability and effectiveness, it is indispensable to ensure that confidence in the stability of public finances remains intact. to achieve this, not only a credible consolidation of public finances is needed but also improvements in economic governance in emu that ensure prudent fiscal policies in the medium to long run. against this background, the current discussion about β and even calls for β euro bonds must be viewed critically. euro bonds would render all euro - area countries jointly and severally liable, thereby eroding each state β s own fiscal responsibility. the incentive for consolidating public finances would be reduced, along with the credibility of and confidence in the state β s ability to service its debt β which is certainly the opposite of what is needed. 5. conclusion ladies and gentlemen, although the financial sector has been at the heart of the crisis, the third phase | as germany currently occupies the role of growth motor in the euro area. these differences within the union should not be dismissed as purely cyclical : they are a consequence of the structural adaptation crisis affecting several countries of the periphery. when one considers the difficulties these countries are currently facing as well as the possible consequences for the euro area as a whole, it becomes evident that the outlook for 2011 and beyond depends on drawing the correct conclusions from the crisis and, from there, taking the right decisions. the expectation at the moment is that the global recovery will continue in 2011, albeit at a slower pace than in the past year. under this assumption, the bundesbank in its december monthly report forecast gdp in germany to grow at a rate of 2 % in 2011 and 1. 5 % the year after. this means that the pre - crisis level of production would be reached at the end of 2011, and production would be back to full capacity at about the same time. indicators that have been bis central bankers β speeches released since then support the picture of an ongoing recovery and have even tended to surprise to the upside. developments on the capital markets during the past year were affected by the loss of confidence that emerged during the course of the debt crisis. the initial uncertainty of market participants about the economic course of major industrialised countries as well as the uncertainty about the capability of several states to service their huge accumulated debt manifested themselves in highly volatile stock prices. even so, financing costs for enterprises were only moderately affected. compared to their five - year average, they actually decreased. stock market developments, however, were rather diverse among industrialised countries. while the japanese nikkei ended the year with a loss of 3 %, the american s & p 500 and the german cdax recorded increases of 13 % and 14 % respectively. even their optimism only gained the upper hand during the course of the second half of the year β at the same time as the economic outlook brightened. 3. financial market regulation the crisis has clearly demonstrated the need for stricter financial market regulation, especially as the financial sector was at the heart of the crisis. safeguarding financial stability has therefore rightly been a top priority on the policy agenda. the g20 agenda and the summit in seoul in november testify to the global dimension of the task of financial market regulation. a number of crucial reform measures designed to secure financial stability have already been approved or at least got underway in the past year. the increase in capital requirements in quantity and quality, commonly termed | 1 |
financial sector will go a long way toward making emes more robust to a wide range of shocks, not just those that may arise from changes in monetary policy in the advanced economies. global investors should also learn from the experience of this summer, when it became clear that unwinding leveraged carry trades can be difficult in an environment of lower liquidity. as for advanced economies, policymakers should move gradually to restore normal policies only as their economic recoveries are more firmly established, consistent with their mandates. in addition, policymakers should communicate as clearly as possible about their policy aims and intentions in order to limit the odds of policy surprises and a consequent sharp adjustment in financial markets in response. indeed, my colleagues on the fomc and i are committed to just such an approach. in closing, the federal reserve β s mandate, like those of other central banks, is focused on the pursuit of domestic policy objectives. this focus is entirely appropriate. yet, experience has shown that the fortunes of the u. s. economy are deeply intertwined with those of the rest of the world. economic prospects for the united states are importantly influenced by the course of the world economy, and, by the same token, prosperity around the globe depends to a significant extent on a strong u. s. economy. in order for the federal reserve to fulfill its dual mandate of price stability and maximum employment, we must take account of these international linkages. indeed, the federal reserve has a long and varied history of doing so, including our actions during the global financial crisis. there is every reason to expect that to continue. 14 thank you. i β ll be happy to take a few questions or comments. see sanchez ( 2013 ). see eichengreen ( 2013 ). bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches bis central bankers β speeches references ahmed, shaghil, and andrei zlate ( 2013 ). β capital flows to emerging market economies : a brave new world? ( pdf ) β international finance discussion papers 1081. washington : board of governors of the federal reserve system, june. bernanke, ben s. ( 2013 ). β monetary policy and the global economy β, speech delivered at the department of economics and sticerd ( suntory and toyota international centres for economics and related disciplines ) public discussion in association with the bank of england, london school of economics, london, march | ##s over recent decades ; growth differentials may partly be reflecting these improvements. as is evident in the right - hand chart, the relationship between the growth differential and capital inflows to emes seems to be quite strong. in particular, the rise in capital flows following the global financial crisis coincided with stronger relative growth performance in emes. and in 2011, capital inflows diminished along with the growth differential. another key driver of eme capital flows is global attitude toward risk. swings in sentiment between β risk - on β and β risk - off β have led investors to reposition across asset classes, resulting in corresponding movements in capital flows. 8 indeed, as shown in chart 3, the most common measure of uncertainty and the market price of volatility β the vix β is strongly correlated with net inflows into emes. although the causes of movements in global risk sentiment are uncertain, the ebb and flow of potential crises and policy responses, such as we experienced during the european crisis, are clearly important. of course, movements in risk sentiment may not be fully independent of monetary policy. an interesting line of research has begun to consider how changes in monetary policy itself may affect risk sentiment. for example, some studies indicate that an easing of u. s. monetary policy tends to lower volatility ( as measured by the vix ), increase leverage of financial intermediaries, and boost eme capital inflows and currencies. 9 see, for example, ahmed and zlate ( 2013 ), bluedorn and others ( 2013 ), fratzcher and others ( 2013 ), ghosh and others ( 2012 ), and imf ( 2011 ). see chen and others ( 2012 ), fratzscher and others ( 2013 ), hausman and wongswan ( 2011 ), imf ( 2013b ), and moore and others ( 2013 ). see ahmed and zlate ( 2013 ), forbes and warnock ( 2012 ), fratzcher and others ( 2013 ), and ghosh and others ( 2012 ). see ahmed and zlate ( 2013 ), bluedorn and others ( 2013 ), forbes and warnock ( 2012 ), and imf ( 2011 ). see bruno and shin ( 2013 ) and rey ( 2013 ). bis central bankers β speeches a second point to bear in mind when assessing monetary policy spillovers is that expansionary policies in the advanced economies are not beggar - thy | 1 |
billion for 2005. i understand that the tokyo stock exchange is currently in talks with major exchanges about alliances and i am heartened to hear its efforts to work more closely with the asian exchanges. for example, the tokyo stock exchange and the singapore exchange have been discussing about such strategic cooperation which would benefit both markets and their investors, including the possible trading linkage, and i urge both parties to work together more closely. we need to cultivate and foster greater bilateral, if not, multilateral cross - border relationships with each other to develop greater liquidity in regional securities and derivatives markets. the current economic growth in japan, singapore, as well as in the broader south - east asian region, gives us a window of opportunity to act swiftly to deepen and enhance trading linkages so as to strengthen asia's competitive edge. together, i believe we can present an attractive value proposition to global investors who are looking to asia for growth. conclusion on that note, let me extend my heartiest congratulations to the tokyo stock exchange on its singapore representative office 10th anniversary celebration. the tokyo stock exchange and singapore have enjoyed an excellent relationship over the years and i do treasure the very important ties and partnerships between japan and singapore. i certainly look forward to many more years of close and fruitful cooperation between the 2 countries in future projects. i wish tokyo stock exchange great success in their endeavours. thank you. | lim hng kiang : the tokyo stock exchange and singapore speech by mr lim hng kiang, deputy chairman of the monetary authority of singapore and minister for trade and industry, at the tokyo stock exchange singapore representative office 10th anniversary, singapore, 14 december 2006. * * * congratulatory remarks i am delighted to be here with you this evening to celebrate the 10th anniversary of tokyo stock exchange singapore representative office. firstly, i would like to thank the tokyo stock exchange for its commitment to singapore and the region over the past decade and i hope tokyo stock exchange will continue to scale greater heights in coming years. growth of asia and japan when tokyo stock exchange established its overseas office in singapore in 1996, singapore and the region were experiencing strong economic growth with asian economies developing at rates of about 5 to 10 % per year. today, we continue to witness the rise of asia on the back of the twin drivers of china and india. prospects for south - east asia have improved considerably and japan, after years of stagnation, is firmly back on the track of healthy sustained growth and is a major investor in south - east asia. as of 2005, japan's fdi into south - east asia totaled $ 38 billion, and it is the top investor in indonesia, and the third largest investor in vietnam. changes in the global exchange landscape the competitive landscape in the global exchange arena has also changed significantly. equity and derivatives exchanges are consolidating globally in the bid to establish greater market share and to expand product offerings. the new york stock exchange - euronext cross - atlantic merger to create the first multi - time - zone exchange, and the recently announced merger between the chicago board of trade and the chicago mercantile exchange could lead to more centralized liquidity pool for derivatives trading in the us and europe. asian exchanges can do more - tse can take greater leading role the consolidation trend has yet to reach asia and asian exchanges may face the risk of marginalisation. in order to remain relevant, the asian exchanges may need to explore ways to deepen collaboration and product differentiation in the face of strong competition. in asia, the tokyo stock exchange is the largest stock exchange by market capitalization. since its establishment in 1878, it has grown to be the 2nd largest bourse globally, with a market capitalization of its listed companies exceeding us $ 4 trillion, second only to the new york stock exchange. it also registers high average daily trading volume for domestic equities of about us $ 19 | 1 |
β decision is precisely β a decision. if we are not participating, we are de facto outside the cooperation which the participating member states have now begun. i find that unwise. in all fairness, i should say that it would not be a disaster if we waited or if we chose to opt out. there is a life outside the banking union. but non - participation will have some implications and bring some challenges that we will have to take into account in the coming years, should that be the path we choose. the implications may seem small today, but in the longer run they could be considerable. going forward, denmark cannot expect to be compared with the members of the banking union when international players try to assess the risks in the danish banking sector. instead, relevant benchmarks will be sweden and switzerland. as in denmark, the assets of the largest banks in these countries amount to approximately 1. 5 times gdp. in these countries, which will not be joining the banking union, the authorities already impose stricter bis central bankers β speeches requirements on the largest banks than we do. people will invariably begin to ask whether the danish requirements are sufficiently high. and so will danmarks nationalbank. in addition, it will become relatively more costly for international investors to invest in danish credit institutions. inside the banking union, investors will have to study one single rulebook and the ecb β s implementation of this rulebook before assessing which of the many banks within the union to invest in. we will be a small country outside the banking union. investors will have to understand our unique national setup β and where it deviates from the banking union β before assessing which danish banks they might want to invest in. that will require a lot in terms of communication from banks and authorities. but no matter how good our communication is, international investors will need to be compensated for the extra resources spent understanding our particularities. when we discuss the banking union, one issue always crops up in denmark β and not without reasons. that is the danish mortgage credit system. and, indeed, the mortgage credit system is one of the uncertainties that make the danish bankers association say β wait and see β. again, i do not quite follow your argument. in recent years, denmark has applied considerable political muscle to ensure that our mortgage credit system has a place in the new single european regulation. we have negotiated with 27 member states, all with their separate national interests to safeguard. and the negotiations went well. this does not mean that current | firms. this is healthy in a banking system and should induce firms with small buffers to consider whether it might be a good idea to increase their capitalisation. this applies not only to limited liability companies, but also to sole proprietors β including farms, for example. in the pre - crisis years, the danish agricultural sector experienced a land price bubble that inflated prices per hectare to unrealistic levels. the high land prices were to a large extent used to pledge land as collateral for raising further debt. since 2008, the average price per hectare has almost halved. this has left many farmers with high debts and a low equity base. this makes them more vulnerable to fluctuations in the prices of agricultural produce, which have shown considerable volatility over time. the shaky foundations of danish agriculture were partly masked by favourable conditions for the sector in the period 2010 β 13, with good prices and rising terms of trade. at the same time, farms could be financed at historically low rates of interest. nevertheless, return on equity was unsatisfactory for many farms. this points to fundamental structural problems within the agricultural sector. the prices of grain, pigs and milk have fallen since the spring, partly on account of russia β s boycott of western agricultural produce. however, prices have not fallen more sharply than we have seen on many previous occasions, and the current price level is relatively normal in a long - term perspective. production and sale of highly volatile goods such as agricultural produce require well - consolidated production units that are resilient to such repeated price fluctuations. the current situation has highlighted the weak capital base of many farms. capitalisation must be strengthened. now i will turn my attention to the banking union. on tuesday, 4 november 2014, the eu β s single supervisory mechanism entered into force. responsibility for major supervisory tasks in the participating member states was transferred to the ecb. this marks an important step in the implementation of the banking union. seen from the outside β from denmark β it is difficult to spot any change. but we must not be mistaken. 4 november 2014 was a red - letter day in europe. the member states participating in the banking union have set the future course for supervision and crisis management of their banks. bis central bankers β speeches they have chosen to have one strong authority to supervise all their banks in future. and they have chosen to transfer responsibility for crisis management to a single resolution board from january 2016. this resolution board will guarantee credible and consistent application of the bail - in | 1 |
conditions ( figure 4 ). in our country, as i showed some minutes ago, wage indicators have posted significant expansion rates, despite the weak outlook on the employment side. this increase is explained by a mix of factors, such as the recovery of real wages after the high inflation of previous years and the upward adjustment of the minimum wage. measured in real terms, the annual increase in the labor cost index ( prepared by ine ) has exceeded its historical averages in recent months. at the same time, indicators obtained from administrative records ( information from unemployment insurance administrators afcs ) show that the real annual variation in wages has been high over the last year. this has had direct effects on some cpi items, while at the same time adding to the cost pressures already noted for businesses. on the activity side, although third - quarter gdp was in line with our september assumptions, domestic demand grew less than expected. by sectors, manufacturing and copper mining performed favorably, while financial and business services underperformed, adding to the prolonged sluggishness of construction ( figure 5 ). as for this quarter, the october imacec showed an increase in activity after falling in september. these results include the impact of temporary supply - side elements on some items, factors whose recurrence added volatility to figures throughout the year. for the same reason, as we have said repeatedly, one should try to infer trends rather than focus on a single data point. the data for the rest of 2024 will also be subject to these factors, particularly due to the combination of december holidays. the lower dynamism of expenditure owes to a weaker private consumption, which was counteracted by greater public consumption. at the same time, the economy has been driven by external demand, as reflected by the evolution of exports of goods and services ( figure 6 ). the slowdown of private consumption occurs in a context of low job creation performance. the data reported by surveys and administrative records show a fall or stagnation in several dimensions, such as formal employment ( afc and afp data ), employment in some lagging sectors ( ine ) and also brackets of lower educational levels ( ine ) ( figure 7 ). contributors to the slow pace of job creation are the meager investment that has been seen for several quarters in the non - mining sectors, the evolution of activity in the most job - demanding sectors β such as construction β and the rise in compensation costs. the real wage bill has tended to | jose de gregorio : the monetary policy report and the financial stability report presentation by mr jose de gregorio, governor of the central bank of chile, before the finance commission of the honorable senate of the republic, santiago de chile, 16 june 2010. * * * introduction mr. president of the finance commission, senator camilo escalona, senators : i am grateful to this commission for the invitation to the board of the central bank of chile to share our views on recent macroeconomic and financial developments and their implications for monetary policy. these are detailed in our monetary policy report ( ipom ) of june 2010 and in our financial stability report ( ief ) for the first half of 2010. we are presenting our reports in the midst of a unique scenario for the central bank. on the one hand, both the chilean economy and the global economy have been on a sustained path of recovery since the second half of 2009. this path has not been free of difficulties. the earthquake and tsunami that swept chile last 27th of february, and which was a major part of our concerns when we visited this commission in march, had negative effects on the february and march output figures. as we said in that occasion, those disruptions were restricted to the short term, as is evident in the strength of the most recent indicators. this does mean that the hardest hit areas are in a precariousness situation, especially in housing. in addition, despite a promising domestic growth scenario, the chilean economy remains operating below full capacity with above normal unemployment levels. this limits inflationary pressures, which is consistent with maintaining a highly and exceptionally expansionary monetary policy ( figure 1 ). on the other hand, financial stress in europe is raising the level of uncertainty regarding the speed with which the world economy will recover and the smooth functioning of global financial markets. although the baseline scenario in the two reports we are presenting today assumes that both the world economy and the chilean economy will keep growing in the coming quarters, the international situation, particularly in europe, together with its impact on our economy and its implications for monetary policy will have to be assessed carefully and continually. all these elements, which are taken into account in every monthly monetary policy meeting, determined that in yesterday β s meeting we began the process of normalizing the significant monetary stimulus currently in place in chile. this is the natural step after the gradual withdrawal of the extraordinary facilities for liquidity provision and the term liquidity facility flap, implemented in recent years to deal with the severe effects | 0.5 |
dream that, in my case, has become reality. however, it would never have become reality without the support, commitment, resolve and efforts of all of you. i really feel privileged having worked with you. you have all the reasons in the world to be proud of your achievements β. never did this sentence have a better application than to yourself, wim : β you have all the reasons in the world to be proud of your achievements β. wim, je kunt met recht trots zijn op alles wat je hebt bereikt in je leven. | benoit cΕure : heterogeneity and the european central bank β s monetary policy speech by mr benoit cΕure, member of the executive board of the european central bank, at the bank of france symposium & 34th suerf colloquium on the occasion of the 20th anniversary of the euro on " the euro area : staying the course through uncertainties ", paris, 29 march 2019. * * * from the beginning of the euro area β s existence, it was well known that it did not meet all of the classic requirements of an optimal currency area. some critics have seen heterogeneity across member states as the factor that would ultimately cause the collapse of the single currency. but the euro is still here, despite years of crisis. while managing heterogeneity between regions and countries has been a challenge β at times tremendously so β this challenge is not insurmountable. no single currency area in the world is free of heterogeneity, including the ones widely regarded as most homogeneous. in my remarks this morning, i will argue that the ecb has always found ways to accommodate heterogeneity, particularly at times when it threatened to impair the uniform transmission of monetary policy. but i will also argue that if we want to minimise episodes of demoralising output and employment losses, as we experienced after the financial and euro area crises, and if we want to avoid overburdening monetary policy, then policymakers need to act more forcefully to reduce the major sources of euro area heterogeneity β that is, we need a better economic policy framework. pre - crisis view on heterogeneity to structure my remarks, i would like to briefly recall the pre - crisis view on heterogeneity in the euro area. inflation differentials between regions and countries were not only thought to be unavoidable, they were in fact thought to be a desirable feature of a currency union. 1 the idea was that the structural transformations sparked by monetary integration and the single market, together with the free movement of goods, capital, services and labour, would create the conditions for all countries to thrive and exploit their comparative advantages. the prime concern at the time was that if these inflation differentials persisted, they could undermine price competitiveness and thus hold back growth. this view was corroborated by the fact that inflation dispersion among euro area countries was not very different from the level observed | 0.5 |
after the establishment of formal diplomatic relationship between the united states and japan, and by then the number of japanese citizens in new york had started to pick up. in fact, this place where we are all gathered tonight, the nippon club - which stands for japan club - will also be celebrating its 100th anniversary this year. benefits from the presence in new york the new york market has continued to grow over the years. time and again, japan has benefited from financial activities in this market. debt issuance following the great kanto earthquake of 1923 is one such instance. when the deal was arranged, the governor of the bank at the time, junnosuke inoue, played an important role. it is interesting to note that his first hand knowledge of the new york market as well as the bonds he formed with u. s. bankers during his tenure as general manager of our new york office proved to be quite valuable for future endeavors. equally significant has been the fact that, over the years, we have had the pleasure of engaging ourselves in countless discussions with such eminent figures as market participants, distinguished scholars, and especially the esteemed federal reserve officials, on topics ranging from monetary policy to financial market developments. on december 1913, the federal reserve act was enacted, and the following year, the federal reserve bank of new york came into existence. through the discussions with the fed, we have 7developed common understandings, such as : the importance of price stability for sustainable economic growth ; the importance of a sound financial system as well as liquid and well functioning financial markets. today, the primary responsibility of the new york office is to develop a channel for a candid dialogue with respectable people widely in the region it covers, that is, both north and south america, but the crucial part is of course the united states, above all, federal reserve officials and banking communities here. it is no exaggeration to say that new york office has been very successful in creating a bond of trust between us. this strong partnership has helped us weather a storm at times of difficulties. at times of no difficulties, too, our new york office gave essential inputs to discussions in tokyo, thereby enabling us to learn a lot about not only the u. s. economy but also economic and financial developments in the world. let me emphasize that our new york office is performing a very important role within the bank of japan. that is not just my personal view, but the entire policy board of the bank appreciates the contribution | , in : econometrica, vol. 71, no. 1, pp. 173 - 204. brunnermeier, m. and l. h. pedersen ( 2009 ), β market liquidity and funding liquidity β, in : review of financial studies, vol. 22, no. 6, pp. 2201 - 2238. regulation β. 4 the policy conclusions include both crisis prevention β with recommendations like the introduction of macro - prudential regulation or liquidity regulation β as well as crisis management with analyses of toxic asset purchases, asset guarantees or mortgage subsidies, for example. notwithstanding the important theoretical advances to which markus brunnermeier contributed substantially, there is still much to be learnt about the root causes, the triggers and the propagation mechanisms of the financial turmoil, and how precisely it spread to the real sector, causing a deep financial and economic crisis arising from negative feedback loops between the two sectors. the severe challenges for policymakers posed by the existing knowledge gaps are reflected in the very controversial debates about the optimal responses to mitigate and resolve the current crisis and to prevent future crises from occurring. quick progress on these and related research topics is essential for the ecb both from a monetary policy and a financial stability perspective. while at present the ecb already performs certain tasks which shall contribute to safeguarding the stability of the financial system, it is foreseen that the range of tasks and responsibilities of the ecb related to financial stability matters becomes substantially enlarged. according to the recent proposal by the european commission on the reform of financial supervision in the european union, drawing on the recommendations of the de laroisiere high - level group, the ecb would play an important role in a new european systemic risk council to be in charge of macroprudential financial supervision in the european union. for the ecb to effectively perform such tasks requires, among other, major investments into a supporting macro - prudential analytical infrastructure, for example the development and implementation of a suite of early warning signal models and the significant extension of existing macro stress testing models. but we also need innovative approaches on optimal policy responses once macro - prudential risks have been identified, since the european systemic risk council will also have to issue policy recommendations. in contrast to the assessment of systemic risks where we have a basis to build on and where our staff has also made research contributions to the literature, macro - prudential regulation or policy is a relatively new concept for which a | 0 |
the relative merits of low inflation versus having more monetary policy leeway in times of crisis. i believe that increasing central banks β inflation targets would be to draw the wrong conclusion. see v constancio ( 2015 ), financial stability risks, monetary policy and the need for macro - prudential policy, speech at the warwick economics summit, 13 february 2015 ; deutsche bundesbank ( 2015 ), the importance of macroprudential policy for monetary policy, monthly report, march, pp 39 - 71. see eg o blanchard, g dell β ariccia, p mauro ( 2010 ), rethinking macroeconomic policy, imf staff position note, spn / 10 / 03. bis central bankers β speeches first of all, it has to be noted that the zlb is not hard and fast. several central banks have set negative deposit rates without immediately spurring a flight to cash, because holding cash in large volumes is not free of charge, either. moreover, central banks have shown during the crisis that they can choose from a repertoire of unconventional measures to further loosen the monetary policy stance when interest rates are already close to zero β although some of the unconventional measures are more problematic than others. what is more, results from macroeconomic models advise against inflation targets of more than 2 %. the optimal inflation rate derived from such models is around 2 % β if the zlb is explicitly taken into account. what is the underlying intuition for this result? higher inflation targets reduce the risk of being restricted by the zlb. but while these events are rather rare, higher inflation targets actually increase the welfare costs of inflation β period by period! to quote a paper by coibion and co - authors : " ( β¦ ) raising the inflation target is too blunt an instrument to efficiently reduce the severe costs of zero bound episodes. " 9 a key point from an economic policy perspective, though, is this : behind the low interest rates are the low inflation pressure and the modest growth outlook β not only in the euro area but worldwide. what is needed, therefore, are strategies for boosting trend growth. and these strategies should not rely on ultra - loose monetary policy or more debt - financed expansionary fiscal policy, but first and foremost on structural reforms that enhance productivity. in this respect, i share the view of the bis, which, in its current annual report, calls for a rebalancing of economic policy. " the aim is to replace the debt - fuelled | shift the japanese economy onto a higher growth path on a lasting basis. however, the preliminary effects of japan β s expansionary monetary policy and its stimulative fiscal policy are in danger of dissipating as the economic upturn was partly attributable to clear anticipatory effects prior to a vat hike. what is more important, however, is that the announced structural reforms, notably measures to liberalise the services market and to expand labour force participation, have not actually been implemented yet. monetary policy cannot solve structural problems. such problems can only be remedied by political means, through growth - friendly reforms. and that is why i would like to talk to you today about what we can actually do to raise the growth potential of our economy. please note that the observations i am about to make are not exhaustive. for example, i will not broach the subject of energy policy which is particularly relevant for german enterprises in terms of how it affects competitiveness. nor will i be commenting on the consequences of demographic change, which i already addressed in my speech yesterday. bis central bankers β speeches returning to will rogers β aphorism, today i intend not so much to focus on central banks per se as on the forces of fire and the wheel. for both of these inventions have galvanised productivity. without fire we would have no energy and without the wheel there would be no mobility. it was the american nobel prize - winning economist, robert solow who first showed how inventions, or technological progress as we would probably say today, and economic growth are connected, to which end he used his own model. the acclaimed solow growth model may be over 50 years old but it has lost none of its effectiveness in giving crucial insights into how growth, investment and technological progress interact. 2. investment and growth one of the key insights provided by the solow model is that in the early stages of an economy β s development, growth is driven by the accumulation of capital, whereas at a more progressed stage of its development, the chief determinant of growth is the rate of technological progress. but there is another more decisive factor at play : in the long run, it makes little sense to invest in a mature economy unless it is technologically advanced or has an abundant supply of labour at its disposal. for these two factors are key to inducing higher income expectations on the part of enterprises. which brings us to the crux of the debate about growth - friendly economic | 0.5 |
economy is very complicated, and in many cases not fully understood. the famous black box monetary economists talk about. finally, the problem of time inconsistency applies to monetary policy as well. monetary authorities may be tempted to create unexpected inflation to stimulate the economy in the short run. eventually, economic agents will revise their expectations and the result will not be a higher growth rate, but a higher rate of inflation instead. hence, playing the monetary piano is perhaps even more difficult than playing the fiscal violin. fiscal policy co - ordination against this background, let β s turn to discussing economic policy co - ordination in the context of emu, starting with the co - ordination of fiscal policies. as i have already argued, playing the fiscal violin is very difficult. by definition, it is even more difficult to prevent fifteen eu fiscal violinists to play out of tune. do my critical observations rule out any co - ordination, at any time? no, under certain special circumstances, fiscal policy co - ordination can be welfare - improving. this assertion is based on a conventional game - theoretical model : fiscal policy - makers maximise independently of each other - a welfare function in which the spillovers of their actions to other players are neglected. the joint welfare of the economies involved increases if fiscal policies are subsequently co - ordinated and policy makers take into account the consequences of their actions on the other players of the game. however, given the caveats mentioned, we have to conclude that the scope for active fiscal policy - making is limited. only in very specific circumstances, the ecofin council should consider the possibility of fiscal policy co - ordination. for instance, when there is a risk of overheating or a common recession, or when the euro area is faced with a persistent balance - of - payments deficit. the basis for the co - ordination of fiscal policies is the multilateral surveillance procedure provided for in article 103 of the ec treaty. in my view, it is possible to elaborate the so - called broad guidelines of the economic policies of the member states, which the ecofin council adopts in conformity with article 103, and include fiscal policy co - ordination. so far, these broad guidelines have been very broad indeed. in the future, they should address individual countries more specifically. when a member state does not comply with the broad guidelines, specific policy recommendations can, and should, be given to the member state concerned. when appropriate, these recommendations should be published. the multilateral surveillance | latitude in people β s expectations ; for example, some people may not share the view that the inflation rate will reach 2 percent in two years. for everyone β including those who are somewhat skeptical β to be convinced that sufficient monetary easing will be implemented, it is appropriate to state that the bank will continue with monetary easing, aiming to achieve the price stability target of 2 percent, β as long as it is necessary. β making such a commitment will, in the end, further ensure the achievement of the target in two years. i also want to elaborate on the meaning of β as long as it is necessary. β the bank does not believe 2 percent inflation achieved at a certain point in time is enough ; rather, it believes 2 percent inflation should be maintained in a stable manner. therefore, even if the inflation rate hits 2 percent at some point, the bank could continue with the quantitative and qualitative monetary easing if it is judged necessary to do so in order to maintain that rate in a stable manner. the opposite could also be true. in short, analyzing the fundamental movement of prices, the bank intends to continue with monetary easing, as long as it is necessary. iii. effects of the β quantitative and qualitative monetary easing β transmission channels of monetary easing effects i will next explain the mechanism of achieving the 2 percent target under the quantitative and qualitative monetary easing. the bank expects that the effects of monetary easing will permeate the economy and influence prices primarily through three channels. bis central bankers β speeches first, the purchases of jgbs, etfs, and j - reits will encourage a further decline in longerterm interest rates and lower risk premia of asset prices. this will raise firms β credit demand through a decline in funding costs. second, as a result of the bank β s massive purchases of jgbs, both investors and financial institutions investing in jgbs are expected to shift from jgbs to such risk assets as stocks and foreign - denominated bonds and / or to increase lending within their portfolios. in economic textbooks, this is referred to as a portfolio rebalancing effect. the extension of the average remaining maturity of jgb purchases reflects our understanding of such an effect. third, the commitment to achieve the price stability target at the earliest possible time and the continuation of the new phase of monetary easing are thought to drastically change the expectations of markets and economic entities. this is what i referred to earlier as the elimination of | 0 |
. this nexus opens the debate on the so - called " financial dominance ", the possible tradeoff between rising costs to curb inflation and effects for financial stability. against this background, one of the key questions is how well are financial systems prepared to rise to the challenge of rising interest rates. the answer to great extent boils down to the health of the balance sheet of households, companies and banks, i. e., their capacity to absorb shocks. what is very important is that banking systems in the region weathered the pandemics shock well and in many countries, including in nm, emerged with even stronger capacity, which can be observed by higher capital and liquidity buffers and better quality of credit portfolio. although according to the recent eib surveys banks expected deterioration of credit quality, npl ratios have remained low ( below 4 % ). still, given the elevated debt levels of the private sector that hovers around 80 % of gdp, increase in real estate prices, which in cesee reached 15. 5 % - the highest growth since the gfc, as well as 2 / 4 bis - central bankers'speeches expected further tightening of the credit conditions, it is not time for complacency. one of the key lessons learnt from the covid 19 crisis is the resilience and it must remain the name of the game for the banking sector going forward. in the current context when the interplay between monetary policy and financial stability is more complex, and trade - offs are larger, macro β prudential management plays an important role. a recent bis paper finds that prudential policy tightening, ahead or during the monetary policy tightening, reduces the likelihood of financial stress and provides more headroom for monetary policy. following the pandemics, countercyclical or systemic risk capital buffers were actively deployed across the region. financial regulators in seven countries, including in our case, intervened with the countercyclical capital buffer4, in six countries ( bulgaria, croatia, romania, slovenia, serbia and montenegro ) have continued to apply or introduced the systemic risk buffer and in five countries implemented borrower - based measures5, which more directly affect the quality of credit demand and contain risks. keeping banking sector sound and in good capacity to lend is important in the light of the urgently needed structural reforms in the region. as we are lagging behind advanced europe in terms of income and productivity, sustaining banks'financing can contribute in narrowing those gaps. at the same time, | financial markets infrastructure. we strongly believe that the hub will be a central point of contact with the industry, including the fintech firms, and will enable building internal capacities for adequate implementation of the new technologies and monitoring of the associated risks, as well as serve as a platform for sharing information and discussing best practices. finally, the innovation hub will also bring the prospect of using digitalization for supervisory purposes, as a complement to our current supervisory methods, principles, and judgement. suptech is becoming synonym for exploring new technologies, especially in the area of supervisory data collection and analysis. the survey performed by the financial stability institute on the use of innovative technology2 reveals that within data collection, supervisory agencies across the world use applications for supervisory reporting, data management and virtual assistance, while within data analytics, applications are used for market surveillance, misconduct analysis, as well as micro - prudential and macro - prudential supervision. to facilitate the contact with the industry, the national bank has recently developed an innovation gateway, as a platform where firms can raise questions and get answers concerning the regulatory framework. the main purpose of the gateway is to facilitate, encourage, and support innovation in financial services, by providing information to all firms willing to pursue innovative business activities. it provides a clearly visible interface to our website and offers an insight view on issues related to application of new innovative technologies. we are pleased that through this channel, launched a couple of weeks ago, we have already received several queries from fintech firms coming from eu member states as well as local fintech company that intends to offer new services in the payments area. our internal expert group will interact with these entities to properly understand their business model, the benefits they bring, potential risks and asses how they fit in the current regulatory framework. one of the main priorities of the hub in the following period will be to develop a financial services digitization strategy. the main goal of the strategy will be to provide an enabling environment, including open and affordable access to core digital services and infrastructures. one of the main components of this strategy is to landscape the fintech ecosystem in the country and to identify the emerging financial services business models and the key barriers to entry for newcomers. a very important component of this strategy will be an analysis of the current national regulatory framework, trying to identify and consider whether it is sufficiently certain and flexible to apply in the modern digital context. a legal framework that is consistent, clear, and predictable is key to fintech innovation | 0.5 |
who owed how much to whom resulted in overnight interbank lending rates increasing significantly and central banks had to provide additional liquidity to facilitate the orderly functioning of financial markets. current estimates regarding the scale of losses suffered by mortgage owners in the us range between us $ 400 billion and us $ 500 billion, although in a recent article krugman ( 2008 ) states that β i think there β ll be $ 1 trillion of losses on mortgage - backed securities... β the turbulence came to the fore in many ways. probably the most pervasive immediate consequence was the repricing of risk. global markets generally experienced considerable volatility and illiquidity and borrowers were confronting tighter terms and conditions, spawning fears of a β credit crunch β which could harm economic growth. credit spreads which had declined to extraordinarily low levels picked up considerably, as illustrated in the accompanying graph. policy reactions to the turbulence one should point out immediately that some part of the turmoil β an upward adjustment to the risk premia imbedded in the prices of a range of financial assets β should be welcomed as a normalisation of affairs, such premia previously having been unsustainably low. however, authorities had to be mindful of the need to prevent total overshooting behaviour, and had to ensure the continued smooth functioning of the financial system as a whole. at the same time the hard - won gains in the fight against inflation had to be consolidated and protected, keeping inflation low and stable. fortunately, the deterioration in the global inflation environment due to the rising prices of energy and food was partly offset by the continued impact of globalisation, the pursuit of sound macroeconomic policies and the effect of a long period of low inflation on inflation expectations. when the turmoil struck the financial markets in the united states quite visibly in august 2007, the federal reserve responded decisively by loosening monetary policy and adding some liquidity to the money market. this provided some relief to cash - strapped borrowers. over the subsequent six months the authorities in the us loosened monetary policy further, with the objective among other things to restore the affordability of housing and halt the rising delinquency rate. the fed also became engaged in match - making and rescuing troubled institutions. a number of prominent financial institutions had to write off huge amounts on account of bad loans, dragging down their share prices and raising concerns regarding their status as creditworthy counterparties. in the past few weeks the federal reserve put its balance sheet in | upgrade of our payment systems has a critical role to play in fostering private sector led commerce. while demand for payments has grown with the advancement of innovative technological solutions, the payment regulatory and infrastructure 3 / 4 bis central bankers'speeches landscape in fiji has comparatively lagged. the proposed reform entails enacting the necessary legislation and regulations and backing this up with the appropriate ict infrastructure and support to enable the following : broadening of the range of payment instruments and services ; improvement of cost efficiencies ; enhancement of interoperability and resiliency ; greater management of risks and provisions of effective oversight ; the promotion of overall efficiency and stability ; and strengthening consumer protection. the reform at large, also aligns to government β s digital payment roadmap 2019 and 5 - year and 20 - year national development plans. these plans and the reform will also address developments for the increasing financial inclusion of our vulnerable population by ensuring that affordable and effective payment products and services are available to the underserved sectors of the economy including msmes, the poor and low - income families ; as well as the increasing globalisation of payment systems, with resulting drive for regulatory harmonisation, fraud prevention and customer funds safeguarding. consultations on the bill honourable members, prior to the tabling of the bill in cabinet last month, consultations for the bill were held with the ministry of economy, the ministry of communications, the association of banks in fiji, the fiji national provident fund, the finance companies association, the insurance council of fiji and the office of the solicitor - general. conclusion honourable chair and members of the standing committee, i wish to conclude with the following points : this is a major reform that will revolutionise a critical part of the everyday commerce and industry. a modern, efficient and reliable payments infrastructure is essential to encourage innovation and commerce, the growth and development of financial markets and improve the transmission of monetary policy. the capability of dematerialisation and clearing and settling a wide range of transactions according to international standards will also enhance the business environment which will in turn attract foreign investment. the overall reform is aimed at making a positive holistic impact on fiji β s payment ecosystem. as the national payment system develops, the experience for payment system participants is expected to improve. businesses are expected to see efficiencies in operations, including declining cash - handling costs and lower administration costs due to increased interoperability between payment system providers, leading to a decline in perceptions of payments as a barrier to | 0 |
we believe that financial digitalization accelerates income growth and democratizes access to more affordable financial products and services. we have also embraced digital transformation in our internal strategy, highlighting our commitment to being an agile, resilient, and proactive organization. we envision to be a digitally transformed organization driven by a strong digital leadership, an innovative and collaborative culture, a secure and resilient technology infrastructure, and optimized work processes that support data - driven decisions. while we recognize the promising benefits of digitalization, we are also cognizant of its attendant risks. thus, we also highlight that these efforts are underpinned by sound digital governance, adequate risk management practices, and robust internal controls. 1 / 2 bis central bankers'speeches given these developments, it is important for the internal audit function to reposition itself as a strategic partner in driving digital value. the independent view of internal audit continues to be crucial, as it plays a valuable role in complementing the first - and second - line functions by providing assurance and advice on governance, risk management, and controls. digital transformations are journeys without borders and the possibilities for digital innovation are endless. as central banks embrace change through digitalization, internal audit teams must forge the same trail ; reassess perspectives ; reimagine audit approaches and methodologies ; and tap on reliable technologies to add more value and provide assurance to the organization. i hope that this meeting will provide a meaningful platform for discussing internal audit β s rapidly evolving role in these areas. the shared views, practices and experiences during the sessions will certainly enrich our knowledge and inform our individual and collective digital transformation journey. thank you and i wish you all a meaningful discussion ahead. 2 / 2 bis central bankers'speeches | : β’ promoting a stronger and more stable financial system ; β’ developing the domestic capital market to make it more supportive of investments growth ; and β’ providing easier access to funds by small and medium - sized businesses as well as micro enterprises. in addition, the bangko sentral will continue to foster an environment that will facilitate further disposal of banks β non - performing assets. other key financial reforms will be focused on aligning prudential regulation of the banking system with international standards and best practices, enhancing our payments system, as well as strengthening corporate governance standards and market discipline mechanisms. meanwhile, microfinance shall continue to be the bsp β s program for poverty alleviation, with collateral - free loans providing the entrepreneurial poor ( e - poor ) with much needed capital to start a micro enterprise. the bsp will also continue to push for the passage of key legislative bills to accelerate the development of the local capital market and further strengthen the regulatory authority. in particular, we shall push for the implementation of a centralized credit information bureau to improve the quality of financial information to investors, expand private sector access to credit, minimize exposure to risks of financial intermediaries, and lower cost of borrowing. we will likewise work actively with other government agencies and the private sector for the completion of critical market infrastructure to enhance system integrity and overall market confidence. at the same time, we will intensify our economic and financial education program so that filipinos can participate in, and benefit from, our economic gains. in this advocacy, i earnestly ask for your support. other filipinos can participate in opportunities that economic development brings if such are brought to their attention and they are made to understand its potential. this is the reason why we have been conducting nationwide lectures on investment options for overseas filipinos and their dependents. and starting june this year, 11 million public elementary students will be taught lessons on money management to help them develop the habit of saving and investing. with this, i hope we can nurture a new generation of financially literate filipinos. conclusion ladies and gentlemen, let me close this message by saying that the philippine economy is likely to weather the challenges it faces, both domestic and external. i believe that with the fundamental strength of the economy backed by the government β s firm commitment to continue to pursue needed reforms, there exists a sound basis for a sustained noninflationary growth in the country. finally, i congratulate ejap for its continuing program to professionalize | 0.5 |
pessimistic is the imf [ international monetary fund ] at 5. 0 percent. our own forecasts [ at the central bank ] are quite consistent with [ finance ] sec. ben's. we, [ the economy ], should be between 6. 0 percent and 7. 0 percent this year. the point is, the economy - even after adjusting for inflation, after removing the effects of inflation on values - we are actually seeing the economy grow by 7. 6 percent last year to 6. 0 percent this year. the importance of targeted assistance and non - monetary measures to support the hardest hit so, the real problem is how to assist the most vulnerable. of course, from a political standpoint, how to address the needs of the middle class because they are the most articulate among all the other voters. we support all the measures that the government is doing. my own reading is, please correct me if i am wrong, is that the imports are finally coming in. that is the case with sugar. but i do agree with congressman [ stella ] quimbo that imports are important short - term measures because, clearly, we cannot increase [ agricultural ] production quickly in three months. agriculture takes a long time. so, imports are necessary, but they will not totally defuse the price increases. in the case of pork, because of swine flu, people actually prefer fresh pork to frozen pork. so, similarly, the imports are, in many cases, not available very, very quickly in places that are far away from manila. one of the other reasons why inflation was higher than expected was because the economy was stronger than expected. in other words, demand was actually strong. you 3 / 4 bis - central bankers'speeches can see in the chart, year - on - year spending in hotels and restaurants was almost 25 percent higher. that is some form of revenge spending [ as ] people have not gone out and eaten [ since the pandemic ]. you can see how crowded the restaurants are. vehicle sales are up [ by ] 31 percent. fortunately, there is some recovery in international tourism. it is still way below what it used to be. finally, you can see unemployment, by historical standards, is quite low. in short, the economy can take the policy rate increases. the real issue is how one can have targeted assistance to the most vulnerable. taking a long - term view on development external [ credit rating ] analysts, for instance, [ | one useful approach would be for the fomc to provide the public with a quantitative, working definition of price stability. the definition of price stability would be expressed as a range of measured inflation, with the lower boundary of the range a safe distance from zero. what i have in mind here is not a formal inflation target but rather a tool for aiding communication. the main purpose of this quantification of price stability would be to provide some guidance to the public and to financial markets as they try to forecast fomc behavior. in a situation like the current one, with inflation presumably near the bottom of the acceptable range and trending down, and with considerable slack remaining in the real economy, the fed could make use of this quantitative guidepost to signal its expectation that rates will be kept low for a protracted period, and indeed that they would be reduced further if disinflation were not contained. if private - sector forecasts also called for disinflation, confirming the downward risk to price stability, then medium - term bond yields should accordingly be low, supporting the fed β s reflationary efforts. in principle, one could communicate a similar message, though perhaps less precisely, without a quantitative measure of price stability. what is missing from the purely qualitative communication approach, however, is an exit strategy. at some point in the future, if all goes well, inflation will stabilize, and interest rates will begin to rise. the task of communicating the timing of that switch to markets with a minimum of confusion and uncertainty is crucial and difficult. a quantitative measure of price stability provides one objective basis that bond market participants could use to help forecast the change in policy stance. for example, they would know that as disinflation risk recedes and inflation forecasts begin to cluster in the middle to upper portions of the price stability range, the fed is quite likely to react. and, indeed, the forecasts of bond market participants and the resulting rise in private yields will help to contain inflation, doing some of the fed β s work for it. in closing, for me the lesson of the may 6 statement was to underscore the vital importance of central bank communication. in a world in which inflation risks are no longer one - sided and short - term nominal interest rates are at historical lows, the success of monetary policy depends more on how well the central bank communicates its plans and objectives than on any other single factor. ideally, the fomc would | 0 |
should keep in mind. first, the eba β s estimate for eu banks is based on fairly conservative assumptions β the actual impact is expected to be somewhat lower than 24 %. and second, only some banks will face significant increases in capital requirements. for some banks the requirements will even decrease. we should not forget the rationale behind basel iii. the aim is to preserve risk - sensitive regulation and, at the same time, reduce excessive variability of risk - weighted assets. this is reflected in the design of basel iii. take the output floor. it sets a lower limit for the risk - weighted assets that banks calculate with their internal models, giving them the freedom to use internal models while at the same time introducing a safeguard. the very same idea appears in other parts of the basel iii framework β the operational risk framework has been simplified, for instance. internal models can no longer be used to assess operational risks ; it had become clear that they were too complex and led to excessive variability in risk - weighted assets and insufficient levels of capital for some banks. in their place, a new 1 / 4 bis central bankers'speeches standardised approach has been introduced, which combines simplicity and risk sensitivity. we agree with the basel committee on banking supervision and the eba on the design of this approach β we recognise the benefit of including past losses in the new standardised approach to make it risk sensitive. this feature also helps to maintain a direct link between risk measurement and risk management β good risk management will keep losses at bay and thus result in lower capital requirements. to sum up : basel iii will change capital requirements, making crises less likely and thus supporting the euro area economy. so we think that the benefits of a faithful, consistent and timely implementation of basel iii will outweigh the costs. and we also think that banks will be able to manage its full impact. i know that some would like to reopen the basel package before implementing it. in my view, this would not serve anyone β s needs ; it would just prolong the period of regulatory uncertainty. the only sensible next step is to implement basel iii in all jurisdictions, including the european union. by sticking to what was agreed we underline that we continue to feel committed to a multilateral framework of standard - setting, which is superior to bilateral agreements and clearly preferable to any kind of trade war. that said, i am aware that basel iii comprises a vast and complex set of standards. we will need to continue evaluating these standards | mark carney : opening remarks to the β empowering productivity : harnessing the talents of women in financial services β report launch opening remarks by mr mark carney, governor of the bank of england and chairman of the financial stability board, at the gadhia review launch, bank of england, london, 22 march 2016. * * * good morning and welcome to the bank of england. it β s a pleasure for us to host the launch of the β empowering productivity : harnessing the talents of women in financial services β report. a series of transformations are sweeping financial services. first, since the crisis, a comprehensive series of reforms have strengthened the resilience of banks. capital requirements are now seven times the old standards for most banks. for global systemically important banks ( g - sibs ), they are more than ten times higher. for uk banks, liquid asset holdings have tripled. trading assets are down by a third and inter - bank exposures have shrunk by two thirds. second, the aftermath of the crisis exposed serious deficiencies in the conduct of many market participants. now, the tide of ethical drift is being reversed and trust in our institutions is beginning to be rebuilt as a result of the conclusion of the fair and effective markets review, the launch of the banking standards board and the ficc markets standards board, as well as the start of the senior managers regime, and the embedding of new compensation regimes that better align rewards with risks taken. third, the disruptive possibilities of the fintech revolution are beginning to touch the core of the financial sector. now it is time for a similar transformation of the diversity of one of the most important sectors of the uk economy. in many respects, jayne - anne gadhia β s report is long overdue. for too long the representation of women in middle and senior tiers of management has lagged that in other leading sectors. for too long, results have fallen short of good intentions. and for too long the financial sector has suffered the economic consequences of this inequality while society has borne the broader costs. greater diversity β in all its forms, cognitive, gender, background, ethnicity, religion β can help transform the financial sector. research has shown that companies with a significant proportion of women in senior management positions perform better in part because of some leadership behaviours that women exhibit more consistently than their male colleagues. 1 in particular, women are found to excel at people development, participative decision making | 0 |
i j macfarlane : economic growth, inflation and monetary policy in australia opening statement by mr i j macfarlane, governor of the reserve bank of australia, to the house of representatives standing committee on economics, finance and public administration, in wagga wagga on 1 december 2000. * * * i would like to start by endorsing the remarks of the chairman and saying what a pleasure it is to be in wagga wagga for the first hearing to be conducted outside sydney, melbourne or canberra. like you, mr chairman, i think it sets a good precedent for future meetings, even if it does represent a cautious start, given that wagga wagga is half - way between melbourne and sydney and not that far from canberra. perhaps the committee will be more adventurous in its future choices. i would also like to record our thanks to the mayor of wagga wagga and his colleagues and to kay hull ( a member of this committee ) for their hospitality earlier this morning. as usual, i would like to start by reviewing the forecasts i put before the committee at the previous meeting in melbourne in may. starting with economic growth, you may recall that the australian economy grew by about 4Β½ per cent per annum in 1997, 1998 and 1999, and, as usual, we were expecting a modest slowdown in the year to june 2000. the forecast i put forward for that period was 4 per cent, and the outcome was 4. 7 per cent, continuing our tradition of modest underestimates of economic growth. for the year to june 2001, i said that we had no quibble with the figure of 3ΒΎ per cent contained in the budget papers, nor would we quibble with the recent update which puts it at about 4 per cent. it is largely a matter of rounding, and not much should be made of small differences : the figure is meant to suggest again some modest slowing from past growth rates. i would note that the number for gdp growth involves a substantial slowdown in final domestic demand β from about 6 per cent growth to about 3 per cent β which is mostly offset by a further swing in net exports into positive territory and the assumption that the inventory rundown recorded over the past year does not occur again. on inflation, the story is a little more complicated. last time we met, i said i expected the cpi to rise by 3 per cent in the year to june 2000 β the actual outcome was 3. 2 per cent. not a very big difference | widespread use of overdrafts in italy, much greater than in almost all the other euro - area countries, should prompt a rethinking of their utilization. firms need to consider more efficient and less costly methods for managing liquidity ; they should also weigh the advisability of greater resort to fixed - term loans. banks must guarantee that the liquidity management services embodied in current account overdrafts do not cost more than their effective value, and they must also take account, in their pricing, of the indirect advantages they reap from the provision of these services. in fact, when the counterparties are small firms, the information asymmetry between banks and firms is more severe, and managing the firms β liquidity enables banks to gather further information, thereby attenuating the risks connected with difficulties and uncertainty over the timing of credit recovery procedures. in august the bank of italy opened consultation on a draft of the resolution to be submitted to the credit committee on the implementation of the newly revised article 120 of the consolidated law on banking, which governs accrual of compound interest on banking transactions. our proposal β prepared as required by the law β is intended as a clarification in the interests of transparency of the rules. it is based on a reading of the law that is shared by the ministry of economy and finance. the solutions set out implement the principle established by the law, namely the ban on compound interest on banking transactions, in keeping with the economic substance of contractual relationships and avoiding uncertainty and any effect on debtors that is contrary to the intentions of the legislature. the most technically complex case to regulate is the current account overdraft, which, as i just now noted, is a much more common form of credit in italy than elsewhere. since the law states that banks cannot require the automatic settlement of the interest due on overdrafts, we have had to create a framework of legal certainty to cover situations in which the customer lacks β even temporarily β the liquidity needed to pay the interest on the due date. the proposal settles this issue by forbidding banks from taking immediate action. it allows the payment of interest by debiting the account, after a period of 60 days has elapsed, only at the request of the customer, who has an interest in allowing payment in order to avoid the legal and practical consequences of non - performance that he could otherwise suffer, including default penalties and revocation of the credit line where the requisite conditions apply | 0 |
further reduce imbalances and to foster competitiveness, growth and job creation, euro area countries need to continue with their reform agenda. as regards fiscal policies, governments should not unravel their efforts to reduce deficits and put debt ratios on a downward path. the composition of fiscal consolidation should be geared towards growthfriendly measures which have a medium - term perspective and combine improving the quality bis central bankers β speeches and efficiency of public services with minimising distortionary effects of taxation. in terms of economic policies, product market reforms to increase competitiveness will facilitate the creation of new businesses, support the tradable goods sector and foster job creation, while high unemployment rates require decisive structural reforms to reduce rigidities in labour markets and to increase labour demand. i am now at your disposal for questions. bis central bankers β speeches | ##ntial standards for large banking organizations and nonbank financial firms designated by the fsoc. these standards will include enhanced risk - based capital and leverage requirements, liquidity requirements, and single - counterparty credit limits. the standards will also require the fsoc β s internal structure consists of a deputies committee β composed of personnel from all of the voting and nonvoting members β and six other standing committees, each with its own specific duties. the deputies committee, under the direction of the fsoc members, coordinates the work of the six committees and aims to ensure that the fsoc fulfills its mission in an effective and timely manner. bis central bankers β speeches systemically important financial firms to adopt so - called living wills that will spell out how they can be resolved in an orderly manner during times of financial distress. the act also directs the federal reserve to conduct annual stress tests of large banking firms and designated nonbank financial firms and to publish a summary of the results. to meet the january 2012 implementation deadline for these enhanced standards, we anticipate putting out a package of proposed rules for comment this summer. our goal is to produce a well - integrated set of rules that meaningfully reduces the probability of failure of our largest, most complex financial firms, and that minimizes the losses to the financial system and the economy if such a firm should fail. the federal reserve is working with other u. s. regulatory agencies to implement dodd - frank reforms in additional areas, including the development of risk retention requirements for securitization sponsors, margin requirements for noncleared over - thecounter derivatives, incentive compensation rules, and risk - management standards for central counterparties and other financial market utilities. the federal reserve has made significant organizational changes to better carry out its responsibilities. even before the enactment of the dodd - frank act, we were strengthening our supervision of the largest, most complex financial firms. we created a centralized multidisciplinary body called the large institution supervision coordinating committee to oversee the supervision of these firms. this committee uses horizontal, or cross - firm, evaluations to monitor interconnectedness and common practices among firms that could lead to greater systemic risk. it also uses additional and improved quantitative methods for evaluating the performance of firms and the risks they might pose. and it more efficiently employs the broad range of skills of the federal reserve staff to supplement supervision. we have established a similar body to help us effectively carry out our responsibilities regarding the oversight of systemically | 0 |
european central bank : press conference - introductory statement introductory statement by mr willem f duisenberg, president of the european central bank and mr lucas papademos, vice - president of the european central bank, at the press conference held in rome, 3 april 2003. * * * ladies and gentlemen, the governing council of the european central bank today met for the seventh time outside frankfurt. let me therefore thank both governor fazio for his invitation and generous hospitality, and the staff of the banca d β italia for an excellently organised meeting. at our meeting today, which took place in the exceptional circumstances associated with the conflict in iraq, we comprehensively reviewed monetary, financial and economic developments. we discussed at some length the potential economic implications of the military operations. in the governing council β s view, it is not possible at this juncture to assess what effect they will have on the global economy, and on economic developments and the medium - term outlook for price stability in the euro area. overall, the basic elements of our assessment of 6 march on the outlook for price stability remain in place and accordingly we decided to keep interest rates unchanged. we also noted that the outbreak of the war has not affected the functioning of the financial system. as indicated in our press release of 20 march, the governing council will act to ensure the proper functioning of financial markets, providing sufficient liquidity in the euro area as needed. let me now explain our assessment of economic developments in more detail. as regards the analysis under the first pillar of our monetary policy strategy, the three - month average of the annual growth rate of m3 was 7. 4 % in the period from december 2002 to february 2003, up from 7. 0 % in the period from november 2002 to january 2003. given the continued high volatility in financial markets, mainly related to the geopolitical uncertainty, m3 growth continued to be fostered by portfolio shifts away from more risky assets. however, m3 growth appears also to have been affected by the low level of short - term interest rates prevailing in the euro area, as indicated by the strong growth in its most liquid components. at the same time, credit growth showed signs of stabilisation in early 2003, after the moderation observed throughout last year. turning to the analysis under the second pillar, recent data and surveys continue to confirm that real gdp growth in the euro area remained weak in early 2003. in particular, the persistence of geopolitical tensions continued to negatively affect sentiment and damp | of countries will come to the fore in the upcoming period and currencies of those countries with lower risk, stronger economic and financial fundamentals and high growth potential are expected to perform better. should macroeconomic stability be maintained and structural reforms be put into effect, turkey will also have a place among these countries. this will support the increase in social welfare in the medium and long term and place our country among developed countries. 6. conclusion in conclusion, the high growth rate we witnessed in the 2002 β 2007 period is evidence of the importance of the implementation of policies based on price stability and fiscal discipline. the high dollarization phenomenon that had adverse effects on our economy in the 1990 β s has been alleviated in recent tears. our currency has regained the confidence of economic agents and turkish lira - denominated investment and loan instruments have been increasingly preferred over fx - denominated ones by institutions and citizens. all these improvements are the favorable consequences of the policies pursued in the post - 2001 period. disappearance of dollarization is a precious legacy entrusted to future generations. likewise, as you may recall, real interest rates reached 20 β 25 percent from time to time and entrenched in the minds of economic decision - makers as β normal β in the 1990 β s. this expectation of high real interest rates has recently been replaced by more reasonable levels. we note this normalization in real interest rates as a remarkable improvement. we assess that if fiscal discipline is not compromised and structural reforms go into effect, in the turkish economy, equilibrium real interest rate will continue to remain at low single digits in the upcoming period as well. lastly, i would once again like to underline the fact that long - term productivity gains necessitate radical economic reforms. the enforcement of the said reforms is a challenging and time - consuming task. moreover, the effects of these reforms will emerge slowly and gradually. however, this is the only way to ensure permanent economic welfare. monetary policy does not have a lasting effect on the long - term growth performance of the economy other than the benefits of establishing and sustaining price stability. the central bank will continue to make a concerted effort to achieve price stability as per the duties and responsibilities entrusted by its law. i would like to end my remarks by extending my regards to all participating academicians and policy - makers for their valuable contributions to the β world business congress of the international management development association β. also, i would like to thank, once more, the members of karatay | 0 |
on research topics you find interesting and helpful. tech assistance / outreach through this biennial conference and several pfp conferences and outreach events each year, the federal reserve facilitates networking among mdi institutions. district coordinators from each federal reserve bank will serve on local exam teams during examinations, and collect feedback from mdis on how the pfp can provide additional assistance. district coordinators meet regularly with mdi management to discuss emerging issues and provide technical assistance, especially to those in troubled condition, to explain supervisory guidance, discuss challenges, and respond to management concerns and inquiries. high - interest items include the community reinvestment act, it and cybersecurity, concentrations in commercial real estate, interest - rate risk, capital planning and rules, anti - money - laundering compliance, and third - party vendor management. we want to help mdis navigate supervisory and regulatory requirements. to do that well, we want to continue to develop an open dialogue so we can better understand the challenges you face and how we can best help you wherever we have the ability to do so. personal contact and relationship building are important to community banking and, i believe, also to community bank oversight. we want, and need, to hear your questions and concerns. last april, we invited the leaders of all fed - supervised mdis to a leaders forum so we could spend a day and a half building relationships and talking about the needs of mdis. we also encourage staff to reach out to mdis and ensure that you are aware of our outreach meetings and research. let β s keep this communication going. we engage is these efforts because your institutions are vital to your communities and to the american economy. on behalf of the federal reserve, i β d like to once again thank you for the work you do in your communities and welcome you to this year β s conference. 2 / 2 bis central bankers'speeches | status of the underlying assets. we are incorporating these items into our supervisory monitoring screens, and we assume market analysts are also making use of these public data for their own analysis of banking risk. clearly, more can and should be done by banking organizations to demystify and clarify the risks they are taking. other areas being discussed include disclosures on the risk profile of bank credit portfolios by internal risk ratings. the first three elements of risk management that i have discussed are fundamental to bank safety and soundness, but without the fourth element - - internal controls - - none of the other elements can be effective. for that reason, an evaluation of internal controls has always been a fundamental part of bank supervision. it is a key to improving the odds that problems are found early and addressed before the bank insurance fund or taxpayer dollars are at risk. in response to a rising trend of unexpected weaknesses in control found at banks, supervisors are seeking to ensure that risk - focused supervision is striking the right balance between reviewing riskmanagement processes and performing procedures to validate whether the procedures are working as advertised. supervisors need to place more emphasis on determining whether the strength and effectiveness of those controls are tested by an independent third party other than supervisors and if they are, how frequently. in particular, as part of our risk - focused supervision, we have endeavored to use the work of internal auditors when it is deemed to be reliable. however, it is becoming clearer that we must bring a new level of skepticism to bear in this area for some institutions. in that regard, supervisors must return to the fundamentals of risk - focused supervision and require substantive verification procedures to confirm the effectiveness and reliability of internal audit, before placing substantial reliance on its findings. in the past, supervisors have taken some comfort in the fact that external accountants have also been looking at an institution's internal controls. as you know, for many banks the federal deposit insurance corporation improvement act ( fdicia ), section 112, requires that the external auditor attest to management's assertions regarding the adequacy of internal controls over financial reporting. recent events among certain banks that have had material financial consequences have caused us to question the usefulness of these attestations. in certain instances, we have been asking external accountants for their fdicia 112 work papers for banking organizations that we have found to have had significant control weaknesses. we are looking into that work to formulate some views on whether this area needs improvements and what actions | 0.5 |
the counterparty. change in legal environment due to legislative changes and court interpretations / proceedings also result in legal risk. legal risk includes risk of nonenforceability of contract or in - correct documentation resulting in the increased probability of loss. broadly, legal risks may result in ( i ) claims against institution, ( ii ) fines, penalties, punitive damages, ( iii ) unenforceable contracts resulting from defective documentation, and ( iv ) loss of institutional reputation. documentation forms an important part of the banking and financial sector. for many, documentation is a panacea to the legal risks that may arise in banking activities. but then it has also been realized and widely acknowledged that loopholes exist in these documentations. as a result of lessons learnt from time to time, the loopholes in the documentation are attempted to be plugged by adding further terms and conditions in existing documents or by adding further documents resulting in voluminous and confusing documentation. in banking there is no end to innovation in documentation because, for keeping pace with the changing needs and aspirations of the customers, banks have been venturing into various kinds of innovative products. identifying the legal risks that lurk behind modern techno - savvy complex transactions and market jargon, is no easy task. the starting point while entering into any financial transaction is the legal capacity to contract and this becomes complex to interpret in respect of innovative financial instruments, since laws or regulators may not have kept pace with financial innovation. the risk of loss due to non - enforceability of the contract in a court of law as one of the counterparties lacks the legal capacity to contract was witnessed in the case of hammersmith & fulham, uk. in this case, the city councils had entered into a series of interest rate swaps with banks, which turned out to produce major losses for the councils due to increase in british interest rates. the swaps were later ruled invalid by british courts as the city councils did not have the authority to enter into such transactions and were found to be ultra vires. as a result, the loss had to be absorbed by the counterparty banks. lessons of the crisis some of the key legal risks faced by entities in the recent financial crisis related to bankruptcy risks, mis - selling of complex derivatives, enforceability of contracts / agreements backing otc transactions across jurisdictions and the hitherto untested risks in the securities market β custodial arrangements, repo transactions, tripartite agreements, securities lending etc. over the | shyamala gopinath : changing dynamics of legal risks in the financial sector inaugural address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the symposium on β changing dynamics of legal risks in the financial sector β, kochi, 30 october 2009. * * * it gives me great pleasure to be amidst you all today to inaugurate this symposium. at the outset, i may say that this symposium on β changing dynamics of legal risks in the financial sector β could not have been organized at a more appropriate time than now. the recent global financial crisis has brought to light various risks. it has to a great extent blurred the distinction between operational risks and legal risks. as they say, each crisis opens up opportunities for learning and innovation ; it is just the right time for the legal fraternity to put on their thinking cap and investigate which of the many risks that culminated in the crisis may be identified as legal risks and what legal steps could have been taken that would have mitigated its effects. contextually in the wake of increased financial integration and globalization, it is essential that in - house legal officers also have an understanding of legal risks from a cross border point of view. i have no doubt that a symposium like this in which heads of legal departments of various regulators, banks and financial institutions are participating where they will have an opportunity to interact with distinguished speakers having rich experience in the field, drawn from within the country and abroad, will provide a proper direction to identify and deal with legal risks. as a central banker with three decades of experience i have had occasions to deal with diverse operational problems and difficult issues. i have no hesitation in saying that inputs received from the legal department of rbi have been very useful. at times one may feel that the legal opinion is a bit too rigid and conservative and fails to recognize the dynamics of the sector, but in the end we all need to appreciate that legal risks have to be accorded prime consideration and addressed. what is legal risk? there appears to be no concrete definition for the expression β legal risk β nor do i venture to make an attempt at defining it considering the complexities and variations in the risks involved. the basel ii accord covers β legal β risk under β operational β risk. legal risk may vary from institution to institution depending on the manner in which it conducts its business and the documentation it follows. the legal risks primarily arise either due to lack of clarity of the documentation of the product or the act of | 1 |
required. ladies and gentlemen ; keeping in view the discussed challenges and opportunities, banks need to devise certain strategies that can help them grow and stay on course. i must say that banks are essentially required to acknowledge that times have changed and in order to stay competitive they must embrace technology and forge new partnerships to re - invent their business models. i will go to the extent of saying that the upcoming age may become the age of less or even non - intermediation where role of intermediary institutions like banks and their regulators could become limited if they don β t embrace these changes pragmatically. page 12 of 15 now i will present few suggestions which can help to proactively address the challenges of the future : β’ first, with regards to the global financial regulatory reforms, we need to be proactive and consider adopting them at an early stage. however, any implementation needs to be proportional to the complexity of the financial institutions and the system. while implementing the standards and regulations relating to aml and cft we must be pragmatic in our approach so that growth of banking industry or their customers is not hampered. β’ second, authorities are now increasingly focusing on improving the situation of financial inclusion in their respective jurisdictions. banks and other players of the financial industry need to come forward and help in this regard. without compromising on the basic regulatory requirements, technology - enabled, risk based approach for assessing client risk and customer on - boarding may be adopted. β’ third, central banks and other regulatory authorities must work towards creating a strong, robust and ubiquitous payments system with focus on developing an enabling legal and regulatory environment that is commensurate with the new technological environment. some of the areas to be covered may include, but should not remain limited to cloud computing, data privacy and protection, cybercrime and formalizing the role of non - banks including critical service providers in the area of technology services. β’ fourth, it is important that we place special focus on formalizing the role of non - banks which include fintechs, payment service providers and especially critical service providers like technology and telecom page 13 of 15 providers because the dependence of financial entities on these players is becoming critical and their failure may threaten the overall financial stability. regulators must especially be wary of issues relating to consumer protection, data privacy and money laundering arising due to new and complex partnerships and data sharing arrangements between banks, fintechs and it service providers. β’ fifth, banks and the financial industry are facing threats from | , consumer finance, agriculture, islamic banking. page 10 of 15 i am also happy to share with you that pakistan has one of the most sophisticated national identity systems which is run by a government entity called national database & registration authority or nadra. nadra has gained international recognition for its success in providing biometricenabled identity solutions to all the citizens of pakistan. the government of pakistan undertook a massive initiative to biometrically verify all sims issued in pakistan and around 130 million sims were re - verified using nadra β s database. state bank of pakistan also capitalized this opportunity by requiring banks to use the nadra database for digital onboarding of customers, especially the unbanked population, and mitigating the risks relating to money laundering and terrorist financing. this is a great example of how technology can be used for not only customer facilitation but for compliance purposes also. due to rapid technological progress, the global financial and payment landscape is transforming very rapidly. sbp has long recognized the importance of technology and has been facilitating banks and financial industry to reap the benefits of digitization. to keep pace with technological transformation and mitigate the associated risks, sbp has issued various guidelines encompassing frameworks for enterprise technology governance and risk management, payment systems β designation, security of internet banking, prevention against cyber - attack, risk management in outsourcing arrangements by financial institutions, etc. i am pleased to share that last year sbp facilitated the issuance of our domestic payment scheme called the paypak. the encouraging aspect of paypak is that it has been issued by a private entity that is owned by 11 page 11 of 15 private banks thus ensuring full blessing and participation of the private sector in this payment scheme. moreover, sbp is developing a national payment system strategy to modernize the clearing and settlement infrastructure for reducing cost, improving efficiency, enhancing security, and strengthening its regulatory and supervisory oversight. sbp is also playing a very important role of facilitator and catalyst and our doors are open to innovation and innovative ideas. sbp is also facilitating the entrance of non - banks particularly in payments arena and has issued rules for payment system operators and service providers. we have seen encouraging response to these regulations and now a variety of nonbank, digitally enabled businesses have entered or are preparing to enter the pakistani market with innovative and customer centric products. sbp also engages with the fintechs in the country on regular basis to understand their business models and facilitate them if | 1 |
act 1961 ( act 71 ). the second is the credit reporting bill that would mitigate a good deal of the credit risks associated with lack of information on borrowers and that is an important factor in credit defaults and non - performing loans. the third is the central depository system bill, which ensures certainty and safety of title to equities and government debt instruments β it should foster the development of the stock market. and finally, the anti - money laundering bill, which will protect the integrity of the financial system. i have dwelled on the policy commitment to financial stability and efficient domestic capital markets for good reasons. we have seen the economy grow in resilience. we have used the strong external current account position and capital flows, including debt relief under hipc initiative, to fund a substantial build - up of reserves. this provides cushion against rising oil prices and other shocks. the significant reductions in the stock of external debt and the domestic public debt over the last few years have improved the savings - investment and growth dynamics and there are signs of growing investor interest in taking risks in the domestic market. we are therefore making these changes to set the stage for the domestic capital market to play a central role in resource intermediation and the growth process. on the side of fiscal policy, the objective of accelerating growth to high and sustainable levels demands that the budget moves beyond the low consolidation threshold of managing tight cashflows and liquidity, towards levels where public expenditure policy provides the vehicle for growth - critical investments to create synergies with the private sector to lead the growth process. obviously, underlying macroeconomic policy should continue to give confidence to the markets that the fiscal space created through consolidation and debt relief will be used productively without risks to macroeconomic stability. the government β s investment strategy establishes the way forward. it identifies a huge infrastructure deficit which must be addressed to reduce barriers and other bottlenecks to growth, while pulling on all the levers to develop the productive capacity of the economy. distinguished ladies and gentlemen, a comprehensive investment plan has been put together to move forward the public sector growth agenda under the gprs ii. the plan requires fresh resources to scale up investments. this is the core of the growth and poverty reduction agenda which development partners will be considering for support at this meeting. thank you. | olayemi cardoso : economic briefing at the joint senate committee on finance, banking, insurance and other financial institutions and national planning speech by mr olayemi cardoso, governor of the central bank of nigeria, at the economic briefing at the joint senate committee on finance, banking, insurance and other financial institutions and national planning, lagos, 9 february 2024. * * * chairman, senate committee on banking, insurance, and other financial institutions : distinguished senator mukhail adetokunbo abiru chairman, senate committee on finance : distinguished senator mohammed sani musa chairman, senate committee on national planning : distinguished senator abdullahi yahaya distinguished vice chairs and members of the joint senate committees here today honourable ministers my colleagues from the central bank of nigeria gentlemen of the press ladies and gentlemen good morning, permit me to read a prepared statement given the seriousness of this matter and then subsequently have a discussion on these topics during the q & a session. i am honoured to appear before this joint senate committee on finance, banking, insurance, and other financial institutions and national planning to address critical concerns related to exchange rates and inflationary pressures in the economy. indeed, this is the major topic of concern in our villages, our towns and our cities. the urgency of the matter is not lost on us at the central bank, and i assure you we are working tirelessly with colleagues across government, including with the leadership of this national assembly, to bring lasting solutions. 1 / 4 bis - central bankers'speeches inflation in december 2023, the economic landscape revealed significant shifts. the headline inflation stood at 28. 92 % in december 2023 as against 28. 20 % in november, food inflation was 33. 93 % as against 32. 84 % in november, while core inflation was 23. 06 % as against 22. 38 % in october 2023. headline inflation surged to 28. 92 %, propelled by food shortages, distribution challenges, and seasonal trends. the festive season's consumer demand upsurge, following subdued periods due to energy and foreign exchange reforms, contributed to this trend, persisting from november through december yearly. the upward trend of food inflation is primarily due to supply shocks caused by insecurity, climate - induced factors such as flood and rainfall shortage in some cases, inefficient, subsistent and seasonal farming practices as well as importation bottle necks that have impacted the prices of imported food items. anecdotal evidence indicates that recent | 0 |
yves mersch : unveiling the new β¬10 banknote speech by mr yves mersch, member of the executive board of the european central bank, at the unveiling of the new β¬10 banknote, frankfurt am main, 13 january 2014. * * * ladies and gentlemen, thank you all for coming here today to the unveiling of the new ten euro banknote. we shall also be announcing the date of its introduction. before we do that, let me briefly explain why we consider the issuance of a new banknote to be an important event. first of all, it β s a chance to consider how europe β s single currency has grown. euro banknotes and coins started circulating in 12 european countries on 1 january 2002. today, 18 countries and 334 million people use the euro in their daily transactions. you can travel from riga to rome, or from barcelona to bratislava, and use the same notes and coins. today is also an opportunity to take a look at what the euro symbolises. 12 years after the euro banknotes and coins were introduced, it β s easy for us to take them for granted and to forget what an ambitious, even bold, project it was to introduce the euro. the single currency has helped to bring millions of europeans together, in all our diversity, and the banknotes and coins are a tangible symbol of our determination to support the european union. when we say, β the euro. our money β, we really mean it! and not just in europe. the euro is now used worldwide, with around 15 billion notes in circulation worth over 900 billion euros in all. that β s broadly comparable to the total value of the us dollar bills, no mean feat in just 12 years. today is also a chance to highlight the importance of maintaining people β s trust in the euro. one of the main reasons for introducing a new series of notes is to ensure that everyone who uses them can continue to do so with complete confidence. that β s why we have drawn on a number of new technologies to modernise the security features, making the notes even more resistant to counterfeiting. in addition, the new banknotes have an innovative coating that makes them more durable than the first series. the five euro and ten euro notes are not always treated kindly. by protecting them better, we can prolong their service life and reduce their environmental impact. the new ten is the second note in the europa series and follows the new five, which | started circulating in may last year. as i β m sure you β ll agree, the note you β re going to see is instantly recognisable as a ten. it certainly resembles the ten euro notes you have in your pockets, with its distinctive romanesque architecture. however, perhaps it will have more of a visual impact, as the images are larger and more defined, the colours are stronger and the bridge has added depth. when you take a closer look you β ll see the new ten has the same new features as the new five : a portrait of europa β a figure from greek mythology β in both the hologram and the watermark, as well as the emerald number, which changes colour from green to deep blue when you tilt the note. introducing a new banknote, especially one used as much as the ten, is a major undertaking. it requires a lot of planning and preparation to gradually replace the two billion or so ten euro notes currently in circulation. i would like to thank all who were involved in this process within the eurosystem. i would also like to thank the banks, retailers and other cash - handling professionals, who will, in the end, put those new notes in your hands. i know that banknote equipment manufacturers and suppliers are already working hard to ensure that the bis central bankers β speeches machines are adapted in good time so that the introduction goes smoothly, and i want to thank them as well for the vital part they play. we are announcing the date of issuance and are sharing the required technical information well in advance to give all parties enough time to get ready. the new europa series ten euro banknote will start circulating on tuesday 23 september this year. and now it β s time to see the new ten euro banknote. bis central bankers β speeches | 1 |
alia, from the restricted access of russian banks and companies to external markets. in order to normalise the situation with foreign exchange liquidity, the bank of russia has introduced reverse transactions to provide it. interest rates on these transactions have been decreased to the level of libor rates plus 0. 5 pp. the volume of foreign exchange liquidity provision is determined by the demand estimates based on the balance of payments forecast. the next one - year repo auction of 15 december will accept eurobonds and provide for the possibility of early deal termination by borrowers. in the near future the bank of russia also intends to consider the introduction of foreign exchange lending secured by non - marketable assets. foreign exchange loans, extended by banks to companies with stable income in foreign currency, are supposed to be eligible as collateral. bank of russia forecast the current situation requires updating the forecasts and adjusting the policy to ensure financial and price stability enabling the economy to adjust to the new conditions and start developing as quickly as possible. the β guidelines for the single state monetary policy in 2015 and for 2016 and 2017 β stipulate that the removal of sanctions and trade restrictions results in certain inflation decrease and moderate acceleration of economic growth. we take this possibility into account but base our policy decisions on the forecasts providing for long - term sanctions. the baseline forecast the bank of russia currently applies in the decision - making approximates scenario iiib published in the aforementioned document. we expect average oil prices to be $ 80 per barrel during the next three years. this average price results from consensus forecast of the leading analysts. bis central bankers β speeches in the scenario under consideration the current account surplus remains on the acceptable level of $ 56 billion in 2015. in 2016 and 2017, no significant changes in the current account balance are expected either. the development of import substitution will boost domestic production. the service sector will see similar trend. conditions for diversification of the economy will be established. contribution of net exports to gdp will be positive. according to the bank of russia estimates, in these conditions economic growth rates will remain close to zero in 2015 β 2016, however in 2017, when import substitution and increase in non - commodity exports become more apparent, we expect gdp to grow up to 1 β 1. 2 %. higher growth rates in the next three years require structural reforms, primarily measures aimed at real improvement of business climate and higher labour productivity. the inflation level is currently affected by the actual ruble depreciation and the imposed | a second possibility is that globalization has restrained unit labor costs by raising productivity. increasing volumes of trade should bolster productivity as economies concentrate their resources in those sectors in which they are relatively more efficient. but i have seen little direct evidence on the extent to which globalization may have boosted aggregate productivity growth in the united states in recent years. nevertheless, research at the board finds that multinational corporations, which may have the greater opportunities to realize efficiencies by shifting production locations, accounted for a disproportionate share of aggregate productivity growth in the late 1990s. 11 and some microeconomic studies have found a relationship between global engagement and productivity at the firm level. 12 thus, it seems possible that the persistently high growth rates of multifactor productivity in recent years may partly be due to the productivity - enhancing effects of globalization. in this regard, i would note that a potential shortcoming of my approach to assessing the effects of globalization on inflation is that these effects may be too recent to be captured adequately by the data. that is, it may be too soon for globalization to have generated statistically observable changes in the parameter estimates or structure of the standard inflation model. nonetheless, if the influence of globalization on inflation is as substantial as many claim, we might have expected the standard model to have had difficulty in predicting recent inflation trends. for example, if recent increases in world labor supply are restraining domestic unit labor costs to a significant degree or if there are other important influences on inflation that are related to globalization but difficult to quantify in the context of the standard model, we would expect to have seen sizable model errors over the past several years. again, the evidence points to some limited influence of globalization on u. s. inflation. if we use out - ofsample dynamic simulations of a model for core pce price inflation estimated from 1985 through the end of 2001, we find that, although the model overpredicts inflation over the past several years, the errors average only 0. 1 to 0. 2 percentage point per year, considerably less than one might have expected given the anecdotes in the popular press. in contrast, the forecast errors from a model of core cpi inflation are larger ( averaging roughly 1 / 2 to 1 percentage point per year since mid - 2001 ), perhaps suggestive of some influence from globalization. what do i conclude from all of this evidence? my own assessment is that, quite naturally, the greater integration of the u. s. | 0 |
asian central banks have been, and continue to be, explored and developed. the bis has made important contributions in this area, with its research providing useful information and insight for policymakers in the region. a : avenue for meetings β to promote discussion and policy analysis among central banks, the asian office has hosted and supported numerous meetings and events in the region, collaborating with other organisations such as the financial stability institute, emeap and seanza. r : reserves management β the asian office plays a vital role in the management and administration of asian bond funds 1 and 2 that aim to broaden and deepen regional and domestic bond markets. the dealing room of the asian office also provides asian central banks with ready access to bis banking services, helping facilitate their liquidity and portfolio management of foreign reserves. over these 10 years, i have seen the asian office play a significant role in helping to strengthen financial sectors, develop financial infrastructure, and promote stability and financial integration in this region. and since its establishment, the hkma has stepped up its participation in the bis'wide range of activities, sometimes co - hosting seminars and meetings, fostering an even closer relationship between us. let me take this opportunity to acknowledge with thanks the great work of the bis management and its staff, who have made the asian office a success. in particular, i would like to thank bob mccauley who has contributed significantly to the achievements of the asian office in the past decade. the accomplishments of the bis in asia over the past 10 years call for celebration. with this in mind, let's celebrate these achievements and anticipate even greater endeavours to come. i propose a toast and wish the asian office continued success for the next 10 years and beyond. thank you. | ##tain to internet banking and to be sure that banks who conduct such business do themselves properly appreciate and allow for such risks. i would mention in particular the strategic risk, in that venturing into a new business arena may not always be assured of success ; the operational risk, of dependence on it networks, and the associated security considerations to which i have already referred ; and any additional banking risks which may arise if internet transactions are deemed to be potentially more volatile or unpredictable, or customers less reliable, than in normal banking business. the need to be confident about the intermediaries with which you are dealing is also very relevant when we examine schemes for so - called digital cash or a cyberpurse. there have been some false starts and business failures in this field, but some potentially more durable systems are now emerging in a number of countries, albeit still mostly in only embryonic form. the concept is of a storage location - or account - somewhere in cyberspace, into which you transfer funds from your bank account or credit card, just as you would draw cash from the bank and store it in your wallet. the schemes are designed essentially for the retail shopper, who can then make payments from the purse for items purchased over the internet : the purse operator responds to your instructions by transferring funds from your purse to an account of the seller. you may wonder what the advantage of such schemes is supposed to be. why not simply pay for each transaction by an electronic instruction to your bank or, more typically in the case of most retail internet purchases, by credit card? the answer is that digital cash purports to offer three advantages. first, it may be cheaper than other means for a series of relatively low value retail transactions. second, it can be used by those who cannot or do not have a credit card - for instance teenagers. third, it offers a degree of anonymity and perhaps a stronger feeling of security, in comparison to using a bank account or credit card, since account - related personal data need not be passed on to the individual sellers of the goods or services. however, people should exercise some caution before utilising such cyberpurse facilities. regardless of how the system may be presented, the purse operator is in effect acting very much as a bank, in particular by holding your money in a sort of deposit. even if you initially acquired the digital cash or credit for free ( through a loyalty or bonus point scheme, for example ), the accumulated β savings β represent | 0.5 |
, such as the imf, the wb, for drafting the medium - term strategies and beyond, for the development of this sector as a vital sector of the market economy and the numerous challenges it has been faced with throughout these years. hence, the albanian banking system is presented as safe, sound, under a constant reformation and consolidation process, passing into a qualitatively new stage, which will provide the business and bank customers with a modern banking service that aims at achieving the levels and standards of western banks. | the functions of determining the volume of credit, issuing, banking interest rate, the payment system, etc. at that time, the reform in second - tier banks was focused on three main directions : 1. introduction of a new regulatory and supervisory framework ; 2. institutional policies in treating the non - performing loans ; 3. plans related to the privatization of state - owned banks. notwithstanding the measures taken for the banking system transformation till 1997, when the collapse of pyramid schemes reached the climax, the banking system was not able to operate effectively in carrying out its intermediation function. private banks, which consisted of small foreign banks or joint - stock banks and which did not have any subsidiaries, hesitated to extend loans and were focussed on foreign exchange transactions and trade financing. the state - owned banks were engaged in domestic lending, but they operated as government agencies, with soft restrictions in funds management and failed to apply the lending practices in compliance with international standards. also, the central bank β s supervisory capacities of that time were limited. some data indicate that the level of non - performing loans at end of 1996 reached to 60 % of the total loan portfolio. besides the weak performance in credit intermediation, the range of services provided to the public was also limited. many of financial activities in the economy were carried out outside the licensed financial institutions. the financial infrastructure, including the payment system of accounting and audit was also rather weak. lack of a formal operational banking system, associated with an insufficient structure of regulations and supervision, contributed to the flourishing of pyramid schemes. the 1997 events served as an encouraging element for deeper reforms in the banking sector. the government of that time, in cooperation with the international community and the bank of albania, affirmed the commitment to implementing a full program of reforms needed for the banking system. the government β commitment to carry out a full program of structural reforms in banking sector served as an instrument for re - establishing the public confidence in financial institutions and services. the program of that period was focussed on four main objectives : β’ improving the legal and regulatory infrastructure ; β’ building sound and reliable institutions ; β’ strengthening the financial infrastructure ; and β’ liquidating or privatising the state - owned banks. besides the adoption of new laws on the bank of albania, on the banking system, on bankruptcy, and on safe transactions, of importance was the program for a rapid change of the state - owned banks β ownership, which led to the liquidation of the anb and the establishment of the bad | 1 |
mostly been from the oil and gas sector, and reflects the protracted weakness in the sector arising from a slump in energy prices. rising defaults over the late part of the credit cycle and difficulties in particular sectors are to be expected, but mas β stress test suggests that most corporates in singapore remain fairly resilient, and banks β exposures to weaker issuers are likely to be manageable. the key here again is to ensure that one has a diversified portfolio. following the recent restructurings and defaults, we have also received feedback calling for a review of the regulations and market practices around the singapore bond market. some ideas include enhancing sales practices, recourse for investors when a bond defaults, and the need for credit ratings. we are considering these feedback and will respond soon. conclusion 27 to sum up, asia β s capital markets have enjoyed a very good run, owing to a confluence of macroeconomic fundamentals and policy liberalisation. asifma has supported that journey over the past ten years by improving transparency through market surveys, advocating innovative solutions through white papers and roadmaps, and building consensus on best practices through events like these and collaboration with other industry bodies. 28 the economic opportunities in asia are immense, and despite the cyclical slowdown, the region β s financing needs will continue to grow. asia needs to continue strengthening its capital markets, especially its bond markets. singapore will support asia β s bond market by introducing a new asian bond grant scheme, encouraging rated issuances, and supporting secondary market liquidity. please enjoy the rest of the conference. thank you. 1 imf world economic outlook, october 2014 2 imf world economic outlook, october 2016 3 dealogic data 4 β learning to live with less liquidity β, morgan stanley and oliver wyman, 13 march 2016 5 β infrastructure for a seamless asia β, asian development bank, 2009 6 " the asean investment report 2015 infrastructure investment and connectivity β, the asean secretariat and unctad, november 2015 7 world federation of exchanges 2015 and 2006 data 8 β ey global ipo trends β, ernst & young, 2006 β 2015 and β ipo watch, asia β, pricewaterhousecoopers, 2007 β 9 world federation of exchanges 2015 and 2006 data 10 dealogic data 11 β asean, prc and india β, asian development bank, 2014 12 β united overseas bank ( uob ) publishes the first global covered bond label harmonised transparency 6 / 7 bis central bankers | for publicly traded companies requiring them to disclose information regarding the scope of their year 2000 problem and the status of their year 2000 readiness. these actions are intended to prompt firms to be more forthcoming in providing information so that firms and investors may respond appropriately. while disclosure rules like those mandated by the sec are a positive development, the year 2000 process itself is constantly evolving, so formal disclosures will almost certainly be months behind the marketplace in accessing the status of firms. voluntary disclosure, therefore, must form an integral part of plans. firms that are forthcoming and disclose their status in forums like the global 2000 meetings set an example for other firms in their countries and provide the marketplace with vital information. in the united states, the oil and gas industry associations recently surveyed their members on the status of company readiness. while the survey revealed that 45 per cent of the respondents are still in the assessment phase, there has been no negative reaction in the marketplace or in the public press to the information. one probable reason for this reaction is that the survey and public disclosure conveys a message that companies have recognized the risks and have implemented programs and resources necessary to address the year 2000 problem ; information is reassuring. the joint year 2000 council the joint year 2000 council is providing a complement to these private sector efforts. we do not represent the global β official sector β, but we are attempting to coordinate and share information among the world β s financial regulators. to that end, we have issued a number of policy papers to provide regulators with a strong sense of better practice. the council also provides information through a bulletin and a website. we also plan to sponsor a series of regional meetings before the end of the year to bring together regulators at a regional level to discuss progress and to provide solutions to challenges. finally, we have held conversations with senior members of the private sector who are members of our external consultative committee to impress upon them the important role that they play in making these preparations. early in its life, the joint year 2000 council issued a statement emphasizing the importance of each country β s developing a national year 2000 strategy, including having senior government coordination. in the united states we have created a president β s council, which is one example of government coordination of year 2000 preparations. this has been a particularly useful tool for allowing further information sharing and disclosure, as well as speeding preparations. in spite of these efforts and examples of good practice, some countries will probably not be as prepared as we would hope. time will run out for a few | 0 |
services. that has also allowed banks and other financial institutions to protect their workforces through work - from - home arrangements, and provided data analytics to raise red flags on networks of covid - 19 fraud accounts. at the hkma, we are committed to supporting innovation that works for all types of customers and for both small and large institutions. we also recognise that our regulatory framework needs to keep pace β focusing on outcomes, and being forward - looking. it is therefore not surprising to see that our fintech supervisory sandbox and chatroom have seen high levels of demand for early supervisory engagement on potential use cases. 7. second, public β private partnerships between law enforcement agencies, regulators and financial institutions exhibited a remarkable growth in the last three years, including in hong kong. that brought about clear improvements to our ability to identify and disrupt financial crime. let me give you some idea of the results that the partnership in hong kong is capable of delivering. since its launch in 2017, actions taken by banks through the fraud and money laundering intelligence taskforce ( fmlit ) have led to hk $ 692 million being restrained or confiscated β that is the proceeds of financial crime, investment scams, fraud 1 / 5 bis central bankers'speeches and other serious crimes. 8. and thirdly, there has been an increasing cultural change in the banks that we supervise β a move away from an overarching desire to simply β tick the boxes β. aml work is now increasingly viewed as more of a multi - dimensional activity, to which the understanding of risks β both current and future β is central and fundamental. there is a much broader acceptance that it is this understanding of the risks which then determines which tools to use, and which tools to develop for possible future use, in order to tackle new and emerging threats. using effective tools in turn helps focus our limited resources on the highest risks, and coordinate the public and private sectors to work together to achieve the best outcomes. 9. so all those three elements i spoke about three years ago have seen impressive progress, particularly with how the aml eco - system has responded to the challenges that covid - 19 has brought, across all sectors and all regions. perhaps it will also be helpful for me to refer to a few practical examples here. 10. first, on covid - 19 scams, those cases have had economic and social effects that are farreaching and often very nasty. much - needed funds have been diverted away from government efforts to contain | peter pang : launch of the new cross - border collateral management service remarks by mr peter pang, deputy chief executive of the hong kong monetary, at the cross - border collateral management service signing ceremony and press conference, hong kong, 20 june 2012. * * * mr. grimonpont, mr. bhatia, ladies and gentlemen, good afternoon. it is my pleasure to welcome you to this signing ceremony. the bilateral agreements that i shall sign on behalf of the hong kong monetary authority with the euroclear bank and j. p. morgan today will pave the way for the launch of the new cross - border collateral management service, a critical building block of the cross - border bond investment and settlement platform launched in march 2012. the new service, which will commence on 25 june, will bring significant benefits to the contracting partners and the money market as a whole. for hong kong, it will advance the development of our repo market, enhance the stability of our financial system and strengthen further hong kong β s role as the global hub for offshore renminbi business. the repo market is a key component of major international financial centres. it serves as the link between the money and capital markets, and is vital to the well functioning of the financing channels. by providing credit enhancement through the use of securities as collateral, the repo market also serves as the lubricant that keeps the financial engine running particularly during times of risk aversion. the new collateral management service, with its cross - border, cross - system, cross - time zone and cross - currency capabilities, will provide an efficient repo infrastructure that will help develop the repo market in hong kong. the importance of the repo market as a financing channel has assumed added prominence since the outbreak of the global financial crisis in 2008. due to a combination of the large inflows of funds into hong kong in late 2008 and early 2009 and heightened risk aversion, the interbank money market has been less active in recent years and financial institutions have been more careful in lending funds to each other on an uncollateralized basis. the average daily turnover of the uncollateralized interbank market has dropped significantly, by 71 % from hk $ 286 billion in november 2007 to hk $ 83 billion in march 2012. the higher frequency of flight to quality, and resultant tightness in the global supply of us dollar, has also affected turnover in the currency swap market. the average daily turnover of | 0.5 |
ravi menon : securing good jobs in a growing financial industry remarks by mr ravi menon, managing director of the monetary authority of singapore, at the inauguration of bnp paribas β asia pacific campus, singapore, 7 march 2014. * * * alain papiasse, deputy chief operating officer and head of corporate and investment banking, bnp paribas group, eric raynaud, chief executive officer of bnp paribas asia pacific, distinguished guests, ladies and gentlemen, good afternoon. i am delighted to join you today to celebrate the opening of bnp paribas β new asia pacific campus here in singapore. it is a truly impressive campus, skilfully combining the charms of a colonial heritage building with state - of - the - art facilities and technologies. a significant move the opening of this campus in singapore is significant for a few reasons. β’ first, it demonstrates bnp paribas β firm commitment to strengthening the capabilities of its staff in asia. this is bnp paribas β first corporate training centre outside of france. β’ second, it shows strategic foresight. bnp paribas took the decision to invest in this campus three years ago, when it was facing a very challenging economic environment with the eurozone gripped by crisis. β’ third, it reflects in a way a broader story of the continued importance of asia to european banks. after almost two years of stagnation, european bank lending to asia has started to rise again. in the area of trade finance for example, recent data shows that european banks are increasing their trade finance activities and have even regained some market share in singapore. three dimensions of a successful finance professional the financial industry in asia and singapore will continue to grow and generate good jobs. β’ in 2013, singapore β s financial sector grew by 11 %, against an overall gdp growth rate of 4. 1 %. growth was supported by increased activities in areas such as corporate transaction banking, trade finance, fund management, private banking and re / insurance. β’ last year, a total of 4, 500 jobs were created in the financial sector, most of them in higher value - added activities. the demand for highly qualified finance professionals will only grow in the coming years. to take advantage of this opportunity, our finance professionals must acquire three things : β’ depth in core competencies β’ cross - functional adaptability β’ asian knowledge and expertise first, depth in core competencies. jobs in the financial industry are becoming more complex, requiring deeper knowledge, | . a too - rapid adjustment of monetary policy could trigger the materialisation of some of the risks mentioned. a too - gradual adjustment may ultimately force policy to be tightened more rapidly to contain overheating, thus giving rise to the β snap - back β scenario. by the same token, the persistence of very easy financial conditions and very low volatility extends the β search for yield β behaviour of investors and the build - up of vulnerabilities in the financial system. in this regard, effective communication by central banks throughout the monetary normalisation process will be key to helping anchor financial conditions, despite the threat of heightened volatility. second, in this complex environment, it is particularly important to emphasise the role played by one of the major policy innovations generated during the financial crisis, namely the development of macroprudential policy frameworks. the proper and timely use of the new macroprudential tools, together with the regulatory and supervisory overhaul of the global banking system undertaken in recent years, should help to contain the build - up of financial imbalances. however, given its novelty it β s difficult to know ex - ante how effective these new macroprudential tools will be. in addition, multiple new challenges remain and need to be dealt with. let me mention a few of them : ( i ) the reinforcement of policy measures to address bank - like risks stemming from the activities of non - banks, which have significantly increased in recent years ; ( ii ) the emergence of new risks, such as those derived from financial technology or cybersecurity ; 4 / 5 ( iii ) the strengthening of sustainable finance to address environmental risk, and ( iv ) the creation or expansion of global and regional backstops. i am certain that our speakers in this conference will address these and other interesting matters. indeed we will have the opportunity to explore this subject in depth through nine selected articles by prominent researchers. actually, we are most privileged to have with us two distinguished keynote speakers, ricardo reis and torben andersen, who will no doubt illuminate us on these important matters. this two - day conference is organised in four sessions : the first will address certain money and market - related aspects. during the second session we will try to shed some light on the propagation of shocks when considering higher - order statistical moments of economic and financial variables. the third session will deal with two issues related to risk which are important for central banks, namely the credit risk associated with monetary policy | 0 |
masaaki shirakawa : some thoughts on incentives at micro - and macrolevel for crisis prevention remarks by mr masaaki shirakawa, governor of the bank of japan, at the eighth bank for international settlements, annual conference, basel, 26 june 2009. * * * introduction the current financial and economic crisis has posed wide - ranging challenges to policymakers and academics. already, various proposals have been made for the reform of financial supervision and regulation. the traditional approach in this area is based on a microprudential perspective. from that perspective, financial system stability will be achieved by assembling sound financial institutions with adequate capital and liquidity positions as well as proper risk management. that approach certainly plays an important role, but i am still uncertain whether the cumulative efforts in that approach will eventually ensure the financial system being shielded from a future crisis. in fact, the financial regulatory and supervisory framework was reformulated from the microprudential viewpoints every time a financial crisis occurred. in that respect, i will raise two questions. the first question is : β has legally effective netting contributed to reducing the overall degree of risk in the financial system? β it is true that netting is effective in reducing counterparty risk. however, once the risk is reduced to a certain degree, a financial institution tends to take further risk. as a result, it is still not certain whether netting contributes to reducing aggregate risk. the second question is : β will a financial institution take a different business strategy not to expand its leverage when facing again a benign economic condition, comprised of low inflation, high growth, and low interest rates? β some financial institutions will surely take a conservative strategy, considering the lessons from the current crisis. but, most financial institutions will find it hard to resist pressures from equity holders to raise the returns on equity under severe competition. those examples seem to show the need for analyzing the incentives of financial institutions from the viewpoints of the macro - as well as micro - level. incentives for a financial institution are underpinned not only by the framework for financial regulation and supervision at a micro level but also importantly by the financial and economic environment at a macro level. at a micro level, β too big to fail β is the single most important issue. at a macro level, monetary policy is important. today, i will mainly focus on monetary policy responses to a bubble. then, i will briefly touch upon some issues on supervision and regulation. importance of risk - taking channel before the | the household sector, firmness in housing investment and car purchases has become pronounced partly due to the effects of the decline in long - term interest rates. as for the outlook, the recovery trend in the u. s. economy is likely to gradually strengthen in the latter half of 2013, as the effects of expiration of tax cuts wane and uncertainties diminish in regard to fiscal spending cuts and the debt ceiling problem. economic activity in the euro area remains weak. from the latter half of 2013, however, economic activity is likely to gradually recover particularly in core countries such as germany and france. this is because ( 1 ) disturbances in financial markets have been diminishing ; ( 2 ) the degree of fiscal austerity, while continuing, has eased somewhat ; and ( 3 ) the competitiveness of peripheral countries β exports has begun to recover with the progress in structural reforms, including reductions in labor costs. the chinese economy has been generally picking up since autumn 2012, as the government β s expansionary fiscal measures centered primarily on infrastructure investment and monetary easing measures have been producing positive effects. the real gdp growth bis central bankers β speeches rate in the january - march quarter of 2013 is expected to recover to the 8. 0 β 9. 0 percent level for the first time in a year. in these circumstances, looking at the outlook for the global economy as a whole, the real gdp growth rate is expected to accelerate moderately from 3. 2 percent in 2012 to 3. 5 percent in 2013 and 4. 1 percent in 2014, according to the latest world economic outlook released by the international monetary fund ( imf ) in january 2013. if the global economy β led by emerging economies β registers growth rates as projected, the rates will be above the historical long - term average. ii. current situation of japan β s economy and its prospects, with the key factor of a pick - up in overseas economies a. leveling out of japan β s economy japan β s economy remained relatively weak during the latter half of 2012, as exports and production decreased significantly due mainly to the deceleration in overseas economies, which in turn adversely affected domestic demand such as business fixed investment in the manufacturing industry. however, recent developments show that the pace of decrease in exports has been moderating and production appears to have stopped decreasing. based on these developments, at the monetary policy meeting ( mpm ) held on february 13 and 14, 2013, the bank of japan revised upward its basic assessment of the | 0.5 |
conditions. for instance, legislation that increases the budget deficit through tax cuts and spending increases can be expected to generate tailwinds to domestic demand and thus to push up the shorter - run neutral interest rate. heightened risk appetite among investors similarly can be expected to push up the shorter - run neutral rate. conversely, many of the forces that contributed to the financial crisis - - such as fear and uncertainty on the part of businesses and households - can be expected to lower the neutral rate of interest, as can declines in foreign demand for u. s. exports. in many circumstances, monetary policy can help keep the economy on its sustainable path at full employment by adjusting the policy rate to reflect movements in the shorter - run neutral rate. in this context, the appropriate reference for assessing the stance of monetary policy is the gap between the policy rate and the nominal shorter - run neutral rate. so far, i have been focusing on the shorter - run neutral rate of interest that is responsive to headwinds or tailwinds to demand. the longer - run equilibrium rate is a related concept. the underlying concept of the β longer run β generally refers to the output growing at its longer - run trend, after transitory forces reflecting headwinds or tailwinds have played out, in an environment of full employment and inflation running at the fomc objective. 4 the natural rate and the neutral rate are closely related concepts whose technical differences matter for economic theory and estimation, but less for the intuitive discussion here. see brainard ( 2015 ). - 3 the longer - run federal funds rate estimated by fomc participants in their summary of economic projections ( sep ) meets the definition of a longer - run equilibrium rate of interest. 5 it is worth highlighting that the longer - run federal funds rate is the only neutral interest rate reported in the fomc projections. but the shorterrun neutral rate, rather than the longer - run federal funds rate, is the relevant benchmark for assessing the near - term path of monetary policy in the presence of headwinds or tailwinds. estimating the neutral rate of interest similar to other equilibrium macroeconomic concepts such as potential gross domestic product ( gdp ) and the natural rate of unemployment, the shorter - and longerrun levels of the neutral rate are not directly observable, so they must be estimated or inferred from the movements of variables that are observed, such as market interest rates, inflation, the unemployment rate, and gdp. 6 in recent years | zhou xiaochuan : development of china β s inter - bank market address by dr zhou xiaochuan, governor of the people β s bank of china, at the opening ceremony of the shanghai clearing house, shanghai, 28 november 2009. * * * mayor han zheng, distinguished guests, dear colleagues, ladies and gentlemen, good morning. today, we gather here to celebrate the establishment of the shanghai clearing house. this is a milestone in the development of china β s inter - bank market. on behalf of the people β s bank of china ( pbc ), i β d like to extend warm congratulations on the founding of the shanghai clearing house. i also thank the shanghai government and people for your gracious support. as a key component of the financial market system, the inter - bank market is playing an increasingly important role in macroeconomic management, fund allocation, pricing and risk management. the people β s bank of china is committed to developing the inter - bank market. over the past few years, efforts have been made to enhance financial innovation, improve the market - based mechanism, and expand institutional investors on the market. the inter - bank market has grown in both depth and width. in 2008, the turnover in the inter - bank borrowing market and the inter - bank bond market totaled 114 trillion yuan, an increase of 560 percent from that in 2003. nominal turnover of interest rate derivatives recorded 924. 32 billion yuan, 6. 56 times that in 2006, while nominal turnover of exchange rate derivatives registered us $ 917. 9 billion, 7. 07 times that in 2006. transactions on the inter - bank foreign exchange market also multiplied. the rapidly developing inter - bank market needs more efficient and secure clearing services. in june, the pbc launched the net value clearing service for spot over - the - counter ( otc ) transactions in the inter - bank foreign exchange market, which effectively reduced bilateral credit sizes and lowered clearing costs. the centralized clearing of otc transactions is an international issue. centralized clearing systems for over - the - counter spot trading and derivatives transactions of foreign exchange and interest rate products have been set up in advanced countries and in emerging market countries such as brazil and india. more importantly, following the financial crisis, countries have reached consensus on controlling financial transactions risks. countries agreed that lowering counterparty risk and ensuring effective supervision and regulation are the key to ensure secure and orderly development of the otc derivatives market, which can be best achieved through centralized clearing. in april, | 0 |
with section 204 ( 1 ) of the act achieving the financial stability objective acting in a way that furthers the objectives or purposes of the prudential legislation acting as a prudential regulator and supervisor under the prudential legislation. the reserve bank board must have regard to the financial policy remit when acting in relation to prudential strategic intentions and standards, as set out in section 49 of the act. matters specified in accordance with section 204 protecting and promoting financial stability can have implications for the government β s broader policy objectives and the wider economy. it is desirable for the reserve bank to have regard to the following matters. the government β s desired outcomes for the financial system it is desirable to have a financial system that is strong, efficient and inclusive, with a low incidence of failure of entities regulated by the reserve bank. resilience as a pathway to prosperity unclassified unclassified within the appetite of a low incidence of failure, a competitive financial system should be encouraged so as to best ensure ongoing financial efficiency and inclusion. in this respect, the reserve bank should have regard to the benefits of : imposing regulatory and supervisory costs that are proportionate to the expected risks and benefits to the financial system and society ; encouraging new investment and financial innovation that raise the productive potential of the economy ; and encouraging the allocation of financial resources in a way that maximises the sustainable longterm growth of the new zealand economy. if a regulated entity does fail, the reserve bank is expected to manage the failure in a manner that minimises the costs of failure and disruption to the broader economy, and prioritises protections for vulnerable consumers, depositors and public funds. other government policy priorities the minister also considers it is desirable for the reserve bank to have regard to the following matters. housing the government has a policy objective to support more sustainable house prices, including by dampening investor demand, which would improve affordability for first home buyers. this is part of the broader government policy statement on housing and urban development, which provides a vision that everyone in aotearoa new zealand lives in a home and within a community that meets their needs and aspirations. climate change the government has a priority of building resilience and facilitating adaptation of new zealand β s economy, society and environment to climate change. it is important that the financial system continues to play an appropriate role in supporting community wellbeing and resilience as it responds to that transition and increases in underlying risks as a result of climate change | well above its historical average since 1964. when the new zealand dollar is either high or low, it tends to remain high or low for longer than the exchange rates of other countries. so in the current situation, not only is it clear that the real exchange rate is high, it is also likely that this elevation will persist for some time. a relatively accessible example of the bank β s research on the exchange rate was a conference we held ( jointly with treasury ) earlier in the year. copies of all the papers from this conference are available at http : / / www. rbnz. govt. nz / research _ and _ publications / seminars _ and _ workshops / mar2013 / programme. html. on a trade weighted basis and against the major currencies involved in new zealand dollar transactions ( other than the australian dollar ), our exchange rate is currently in the top decile relative to historic experience. bis central bankers β speeches what are the drivers of the real exchange rate? we can think about what drivers the exchange rate in a couple of ways. one is the cyclical dimension of the exchange rate and the other is the long term level. the reserve bank has models that are able to explain a good proportion of cyclical fluctuations in the exchange rate. 3 these models typically highlight the correlation between the exchange rate and a few key variables, such as the terms of trade, interest rate differentials, relative house price inflation, and measures of risk. of course, one should never confuse these correlations as causal explanations of the exchange rate. figure 2 illustrates how the cyclical movements in the three most important variables used in one of these models can explain a large proportion of exchange rate fluctuations. 4 even though we can explain the cyclical movements in the exchange rate these movements may not be welcome by the tradables sector because, among other things, it adds uncertainty to decision making. that said, short term exchange rate volatility can be effectively countered through the use of forward exchange rate contracts, but it remains true that longer term exchange rate cycles are more difficult to handle for many exporting firms. for examples see mcdonald, c ( 2012 ) β kiwi drivers β the new zealand dollar experience β an 2012 / 02 and cassino e and z wallis ( 2010 ) β the new zealand dollar through the global financial crisis β rbnz bulletin september 2010. for specific details see mcdonald, c ( 2012 ) β kiwi drivers β the new zealand dollar experience β an 2012 / 02. | 0.5 |
abdul rasheed ghaffour : malaysia international islamic financial centre - uk business forum 2024 opening address by mr abdul rasheed ghaffour, governor of the central bank of malaysia ( bank negara malaysia ), at the malaysia international islamic financial centre ( mifc ) - uk business forum 2024, london, 10 september 2024. * * * assalamualaikum and good morning, first and foremost, allow me to express our gratitude to his royal highness sultan nazrin shah, for gracing our forum today and for his unwavering support and leadership in advancing islamic finance. his royal highness in various capacities including as the royal patron of the malaysia's islamic finance initiative and his global humanitarian involvements, continue to inspire all of us. over many years, his royal highness has been active in advocating for the transformative potential of islamic finance and social finance in addressing the pressing challenges facing the world today β extreme poverty, climate change, human displacement due to geopolitical conflicts, among others. just last saturday, at the 15th sc - ocis roundtable, his royal highness has called for restoring of humanity in finance, emphasising the importance of balancing more carefully the paramount goal of economic growth with the goals of environmental stewardship and social inclusion. like all of you here today, i look forward to the insights and perspectives from his royal highness'keynote address shortly. it is with great honour that i welcome all of you to the mifc - uk business forum. we gather here today not only to exchange ideas but to forge meaningful connections and explore what we can do together to catalyse islamic finance. malaysia and the uk have long sustained strong economic and financial ties. the uk has always been an important partner for malaysia. we hope that these strong interlinkages can pave the way for innovative collaborations in islamic finance, sustainability, and trade to further bolster our economies. let me first share some insights on malaysia's economic landscape and prospects that offer opportunities to investors. for many years, malaysia has carefully navigated unprecedented challenges β not just crises such as the asian financial crisis, the global financial crisis and the covid - 19 pandemic, but also the ever - evolving economic landscape, global and regional geopolitics, as well as our own shifting domestic landscape. through thick and thin, our financial market remained orderly, and our economic fundamentals remained sound, supported by resilient domestic demand and a robust external sector. in | scammers. the public is advised to frequently check the amaran scam facebook page by bank negara malaysia, as well as cyber crime alert and semak mule by pdrm for the latest updates. recognising the need to intensify the awareness on financial scams, i would like to congratulate the banking industry for coming together to undertake the national scam awareness campaign. throughout this campaign, the public can expect to see more prominent scam awareness advertisements, messages and prompts on banks'own channels as well as mainstream and social media. i understand there will also be community outreach programmes to educate the public. as digital finance becomes increasingly pervasive, and as new threats emerge, the effort to educate the public must be sustained well into the future. we cannot rest on our laurels. i would like to reiterate that the fight against financial scams is one fought on multiple fronts. we are only stronger if we work together and play our part in order to safeguard the security and integrity of our country's financial system. 2 / 2 bis - central bankers'speeches | 0.5 |
- term behaviour and developments at the expense of the necessarily medium - term orientation of monetary policy. at the same time, monetary and credit data can offer an important insight into how financial institutions, households and firms have responded to the financial market volatility. in this respect, monetary analysis adds significantly to the robustness of the assessment underlying our monetary policy decisions. in sum, available data suggests that economic activity in the euro area may continue to expand at rates close to potential output growth in the second half of 2007 and 2008. the sound fundamentals of the euro area economy β notably the healthy financial situation of the corporate sector and the strong labour market β bode well for a smooth absorption of the recent financial market turbulence. global economic activity is expected to remain robust and to provide support for euro area exports and investment. consumption in the euro area should contribute to growth in line with developments in real disposable income, as employment conditions remain supportive. at the same time, risks to price stability remain on the upside. there is, nevertheless, a high margin of uncertainty surrounding this outlook and risks for the economy are on the downside. they relate mainly to a potentially broader impact for a further discussion see the article entitled β measured inflation and inflation perception in the euro area β in the may 2007 issue of the monthly bulletin as well as the box on β recent food price developments in world markets and the euro area β in the september 2007 issue of the monthly bulletin. of the reappraisal of risk currently occurring in financial markets, possible disorderly developments related to global imbalances and protectionist pressures, as well as potential further oil and commodity price rises. labour productivity developments in the euro area one piece of the information jigsaw that the ecb puts together in its assessment of the economic situation and the outlook is the development of labour productivity. when we look at recent developments, data released by eurostat in spring 2007 showed a clear acceleration in labour productivity growth ( per person ) in 2006, reaching 1. 4 % growth compared with 0. 7 % in 2005. in year - on - year terms, labour productivity growth peaked at 1. 7 % in the fourth quarter of 2006. at sectoral level, positive developments in labour productivity were mainly driven by developments in industry ( excluding construction ). however, labour productivity growth in the services sector also showed signs of improvement, recording an increase of 0. 8 % year on year. these positive developments were welcomed by some economists as a reversal | mario draghi : ecb press conference β introductory statement introductory statement by mr mario draghi, president of the european central bank, frankfurt am main, 7 november 2013. * * * ladies and gentlemen, i am very pleased to welcome you to our press conference. i will now report on the outcome of today β s meeting of the governing council, during which we took a number of decisions on key ecb interest rates, forward guidance and liquidity provision. first, based on our regular economic and monetary analyses, we decided to lower the interest rate on the main refinancing operations of the eurosystem by 25 basis points to 0. 25 % and the rate on the marginal lending facility by 25 basis points to 0. 75 %. the rate on the deposit facility will remain unchanged at 0. 00 %. these decisions are in line with our forward guidance of july 2013, given the latest indications of further diminishing underlying price pressures in the euro area over the medium term, starting from currently low annual inflation rates of below 1 %. in keeping with this picture, monetary and, in particular, credit dynamics remain subdued. at the same time, inflation expectations for the euro area over the medium to long term continue to be firmly anchored in line with our aim of maintaining inflation rates below, but close to, 2 %. such a constellation suggests that we may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2 % later on. accordingly, our monetary policy stance will remain accommodative for as long as necessary. it will thereby also continue to assist the gradual economic recovery as reflected in confidence indicators up to october. second, following today β s rate cut, the governing council reviewed the forward guidance provided in july and confirmed that it continues to expect the key ecb interest rates to remain at present or lower levels for an extended period of time. this expectation continues to be based on an overall subdued outlook for inflation extending into the medium term, given the broad - based weakness of the economy and subdued monetary dynamics. third, we continue to monitor closely money market conditions and their potential impact on our monetary policy stance. we are ready to consider all available instruments and, in this context, we decided today to continue conducting the main refinancing operations ( mros ) as fixed rate tender procedures with full allotment for as long as necessary, and at least until the end of the 6th maintenance | 0.5 |
services providers are low even when there are no legal obstacles to or monetary costs in doing so. while biases are deeply embedded in the human mind, they have not prevented humans from becoming ( for better or for worse ) the dominant species on earth. in fact, in many circumstances, biases and mental shortcuts will β do the trick β and help us to d. kahneman and a. tversky. β prospect theory : an analysis of decision under risk. β econometrica, vol. 47, no. 2, 1979, pp. 263 β 291. kahneman, d., β thinking, fast and slow β, new york : farrar, straus, and giroux, 2011 ; kahneman, d. β maps of bounded rationality : psychology for behavioral economics. β the american economic review, vol. 93, no. 5, 2003, pp. 1449 β 1475. take decisions instantly and without effort that we would not later regret, by and large. 6 however, the jungle of finance is in many ways different from the environment where humans have evolved over hundreds of thousands of years. when it comes to financial decisions, mental shortcuts that were efficient for escaping lions or capturing gazelles may prove inadequate to make ( say ) choices on long - term financial retirement plans. they may prompt consumers to take decisions that they would not have taken based on a more thorough assessment. the evidence from behavioural economics should be enough to convince regulators and supervisors that it is crucial to complement the traditional regulatory approach β based on pre - contractual disclosure to overcome information asymmetries β with behavioural insights. policy makers have started testing new instruments, examples of which include : i ) standardising pre - contractual documents, so that they selectively provide ( or highlight ) only those pieces of information that are most relevant to the consumer ; ii ) prescribing the use of the most effective channels for interacting with customers : for instance, evidence exists that text alerts and mobile banking apps are much more effective than periodic reports for attracting the attention of consumers that are incurring overdraft charges ; 7 iii ) focusing on the overall fairness of contractual relationships, e. g. in order to limit any over - indebtedness induced by present bias ; iv ) establishing cooling - off periods, i. e. the possibility for consumers to withdraw from contracts, especially in the event of cross - selling practices and distance selling ( thus neutral | democracy β political stability and reengagement of our development partners. as a result, consumption and investment activity have been very robust. this is confirmed by trends in the various partial indicators. improved disposable household incomes from lower taxes, government financial support and remittance inflows from fijians abroad continue to underpin consumer spending. the vehicle industry has clearly benefitted under this climate and this has been further supported by favourable labour market conditions, as reflected in growing numbers of newly registered members with the fiji national provident fund and job advertisements placed in the daily newspapers. bis central bankers β speeches investment activity has expanded and continues to grow with momentum from both the private sector and government. in recent years the government has allocated sizeable budgets for infrastructure development, which benefit both the public and private sectors and which will gradually unlock previously untapped resources across our major islands as our local entrepreneurs begin to play their part to develop their businesses. this year, despite tropical cyclone ( tc ) winston and the april floods brought on by tc zena, the fijian economy is still forecast to grow by 2. 4 percent. this growth reflects expected strong activity in our tourism - related industries, including transport, wholesale, retail, accommodation & food services, which were relatively unscathed by the cyclones. in addition, with the on - going reconstruction and recovery efforts, construction activity is expected to remain strong, further boosting retail sales activity. ladies and gentlemen, we know that imports of investment and consumption goods are projected to pick up as the domestic economy strengthens and reconstruction efforts postcyclones continue. when we couple this with expected lower exports of agricultural products as a result of the natural disasters, it is possible that we will see a small dent in our foreign reserves towards the end of this year. nonetheless, at the moment, our official reserves continue to remain comfortable, at just under $ 2. 0 billion, or enough to pay for 5. 5 months of retained imports. inflation, another key macro - economic indicator which we monitor closely, spiked in june to 5. 3 percent on the back of price hikes in local agricultural market items following the cyclones. this effect will be temporary, and in the near - to - medium term, we forecast inflation to be stabilised by the existing low world commodity prices. our end - year number for inflation is closer to 3 percent. the medium term outlook for the fiji economy is expected to remain positive. notwithstanding any further adverse shocks, our | 0 |
regional forum on β emerging opportunities and challenges of financial inclusion β talking points mr. erwin rijanto, deputy governor of bank indonesia β financial inclusion for sme in indonesia β kathmandu, 9 november 2016 i. introduction 1. a very good afternoon and warm greetings to : a. mr. shitangshu kumar sur chowdhury, chairman of apraca ; b. mr. shiba raj shrestha, vice chairman of apraca ; c. the member of apraca ; d. ladies and gentlemen. distinguished guests, 2. we are all aware that financial inclusion has become a priority in the world, but it has now also been considered as national agenda for indonesia. 3. in this honorable meeting, i would like to share indonesian β s experience regarding the financial inclusion in indonesia, and its relation to sme. ladies and gentlemen, ii. current condition in indonesia 4. considering the current condition, indonesia with its population of almost 250 million people which 28 million people living in poverty line remains to be unbanked. taking a closer look these large portion of the unbanked clustered around poverty line remains vulnerable. geographic condition adds the challenge in providing access to this target group as indonesia consist of almost 17. 000 island and most of poor people live in a very remote area with different culture. on the supply side, there are several factors inhibiting services to the community such as limited communication network and electricity infrastructure. 5. based on our survey, banked people reached 39 % in 2015. it is still in a long journey to reach the target of 75 % banked people at the end of 2019. the percentage of 39 % in our survey means they have a savings or credit account, insurance or formal means of low - cost payments. outside of 39 % still use financial services but rely on the age - old informal mechanisms : family and friends, the rotating savings club, the moneylender, the pawnbroker, cash under the mattress and long - term savings in the form of livestock. these mechanisms are incomplete, and can be very unreliable, risky and expensive. 6. interestingly, indonesia is one of the fastest - growing user smartphone in the world : nearly 60 million of the country's citizens will have smartphones in 2016. continuously, indonesia β s smartphone users are expected to grow at a compound annual growth rate ( cagr ) of 11. 2 % between 2016 and 2020, to reach more than 100 million and become the fourth - largest global market | ##e, managing director of the imf : β greater financial inclusion has tangible economic benefits, such as higher gdp growth and lower income inequality. by providing access to accounts, credit, infrastructure, women and low income users, financial inclusion helps make growth more inclusive β. thank you. kathmandu, 9 november 2016 mr. erwin rijanto deputy governor of bank indonesia | 1 |
close with a final thought. the largest problems that countries create for others often emanate from getting policy wrong domestically. recession or instability at home is often quickly exported. equally important, growth and stability abroad makes all our jobs easier. this means that there are externalities in the work we do, so that more effective fulfillment of our domestic mandates helps to bring us to a better place collectively. ensuring global growth and stability is and will remain our joint and common endeavor. this is what terry checki has worked for over his distinguished career. we have been very fortunate for his service and must carry the mantle forward. bis central bankers β speeches | having a reserve currency may also be desirable for other reasons. first, with more reserve currencies available, portfolio diversification opportunities are enhanced. this is desirable because, all else equal, it would allow investors to move further out on the risk / return frontier. second, more currencies are likely to be close substitutes, which could dampen currency volatility. with many viable reserve currencies available, no particular one would necessarily have to bear the bulk of any adjustment. the dollar β s dominant reserve currency status has sometimes been referred to as the united states β β exorbitant privilege, β implying that the u. s. benefits extraordinarily from this privileged status. i β d argue that the situation is much more nuanced. yes, this status does allow the u. s. to benefit from seigniorage. more than half of all u. s. currency outstanding is held abroad. but, there are also costs of being the dominant reserve currency. for example, this can lead to shifts in the valuation of the dollar that are due primarily to developments abroad that affect risk appetites and international capital flows. in such cases, the dollar β s valuation can be pushed to levels inconsistent with u. s. economic fundamentals. for the united states, i believe that the most important goal must be to keep our own house in order. if we do this, then i expect that the u. s. dollar will earn the right to remain the most important reserve currency in the world. the united states has a number of advantages in sustaining the dominant reserve currency status of the u. s. dollar. first, there is a first - mover advantage. as the leading reserve currency in the world, there is no strong incentive for countries to move to other currencies as long as the dollar continues to have the attributes i discussed earlier. the history of reserve currency usage is characterized by considerable inertia. the u. s. dollar emerged as the leading reserve currency quite a bit after it became the world β s largest economy. typically, the loss of dominant reserve currency status requires either substantial economic decline or political instability that motivates foreign counterparties to shift to a new reserve currency. second, the u. s. has the deepest and most liquid capital markets in the world. this is important in making u. s. treasuries and agency mortgage - backed securities attractive holdings as part of countries β foreign exchange reserve portfolio | 0.5 |
. in this regard, only a few weeks ago, the independent evaluation office reported on exchange rate surveillance for the period 1999 - 2005 and concluded, among others, that β the imf was simply not as effective as it needs to be in both its analysis and advice, and its dialogue with member countries β 5. this shows that, in this case, there is unanimity that there is need for change. a. mirakhor & i zaidi ( 2006 ) β rethinking the governance of the international monetary fund β imf working paper wp / 06 / 273. r. cooper & e. truman e. ( 2007 ) β the imf quota formula : linchpin of fund reform β. independent evaluation office ( 2007 ), β imf exchange rate policy advice, 1999 - 2005 : an ieo evaluation β. on a related matter, the policy support instrument ( psi ), which was introduced in october 2005, was in recognition of the fact that fewer countries need to borrow from the fund. while it is acknowledged that one contributing factor to the reduced need for fund lending is the extent of success of imf programme implementation in the past, this reduced recourse to fund resources should not lead to member countries ignoring the fund β s reform programmes and policy advice, because doing so would be counter - productive. i hasten to add that, although not a borrower of fund resources for programme assistance, botswana values her long - term partnership with the fund. there is absolutely no doubt that fund advice has largely been beneficial ; so too has technical assistance. however, in the advent of the psi, we should ask whether it has moved far enough from the poverty reduction and growth facility ( prgf ). is there still too much prescription and not enough discussion? is the fund β s endorsement of policies still so important for member countries, given the increased opportunities for funding provided by financial globalisation? and what are members to do when the assessments by the fund and world bank differ radically? it will be interesting to see the number of countries, if any, that have so far taken advantage of the programme, now that the psi fact sheet is published on the imf website. furthermore, the fund needs to change its approach to surveillance and, accordingly, some important structures of the fund, such as the imfc, have suggested that surveillance needs to become more advisory than prescriptive. it is felt that such an approach would encourage country ownership of decisions resulting from | to, not least because it does have economic consequences as well as implications for social capital and the public β s trust in a state β s institution monetary policy decisions inevitably affect financial markets, and the wider economy. this is why central banks must have a clear mandate, which in the case of the euro area is of course price stability. we also conduct proportionality assessments, which include analysis on the benefits and the possible side effects of monetary policy measures, their interaction and their balance over time. overall, central banks do not have the mandate or the tools to deal with societal concerns around excess income or wealth inequality. 29 governments are best placed to address the concerns in their societies around these developments. but we do need to ensure that while we take our decisions with a clear goal in mind, we also understand the side effects of our actions and that they do not outweigh the benefits. conclusion there are three things i suggest we should bear in mind. first, central banks need trust to succeed. trust is stronger where social capital is strong. central banks can help build social capital through their actions. second, social capital is an important determinant of a community β s wellbeing, alongside human capital, natural capital and financial and physical capital. ( i like to describe these capitals as our collective β economic capital β 30 but that is a subject for another day. ) an important fact is that social capital does not grow on its own. an economy, a society and its environment are all complex systems that constantly interact with each other. societies need to invest in economic, social and environmental infrastructures β including institutions such as central banks β to enable social capital to grow. third, stasis is not an option. the frameworks we operate with, the ideas that β ramify β¦ into every corner of our minds β, must be capable of change. 31 as i said, preserving institutions could also weaken them. our challenge is to understand how and when our frameworks need to change. we need to be ready to challenge familiar paradigms, as one way of eroding social capital is to ignore the need for change. so where does this leave us? well for me, back to the beginning and back to the present. back to the beginning, in the sense that at their core central banks exist to provide monetary stability. back to the present, in that inflation has continued to surprise on the upside because of unexpectedly high energy costs. the path for our monetary policy will continue to | 0 |
##ed resources? another aspect of the speed limit to economic growth, at least in the short run, is the level of unutilised resources. an important component here is the extent of unutilised labour. experience shows that the stability of inflation has to do with the level of unemployment. if unemployment falls below a certain level, a stronger stimulation of production and employment ( by means of a more expansionary economic policy, for example ) simply leads to bottlenecks, shortages and rising inflation. instead of a permanently higher level of employment, the end result is a return to higher unemployment. this level of unemployment is not something that monetary policy can alter. it has to do with other factors, such as occupational and geographical mobility, the propensity to take the jobs that are available, and so on. contributions in this field can be made with other components of economic policy but not, as i said, with monetary policy. the problem we face is that unemployment β s critical level cannot be identified for certain and we do not know when shortages and rapid wage increases will actually arise. estimating these matters is difficult and the results cannot be taken for granted. it is therefore hard to tell how much scope there is for a temporary phase of economic growth above the long - term trend. the ability to look ahead and formulate monetary policy cautiously is particularly important when an economy is moving further and further along an upward phase. otherwise there is a risk of price and wage increases accelerating so that the brakes have to be applied more abruptly later on, leading to a situation that is worse than would otherwise have been the case. thus it is in this phase of rising activity that we can be said to influence the depth of the next slowdown. it was the overheating in the late - 1960s, the mid - 1970s and the end of the 1980s that set the stage for the subsequent deep troughs. and each recession was worse than its predecessor. looking back, it is easy to see that economic policy ought to have been tightened much earlier than was the case on those occasions. at the same time, it has tended to be difficult, not least in fiscal policy, to take such measures sufficiently early, particularly as that needs to be done before the problems are clear to everyone. that is also why pre - emptive interest rate hikes not infrequently encounter criticism from some quarters. but a central bank has a job to do and must perform its statutory functions. but neither, | lars heikensten : monetary policy and the economic situation speech by mr lars heikensten, governor of the sveriges riksbank, at handelsbanken, karlstad, 26 january 2004. * * * it is nice to meet a group of representatives of the business and social community in this way in varmland. i would therefore like to begin by thanking the organisers of today β s lunch meeting. when i took office as riksbank governor last year i decided that i would leave stockholm shortly before each monetary policy meeting and visit different parts of the country ; both to learn more about developments in various parts of sweden and to explain the riksbank β s work and actions. my visit to karlstad today is the first of these trips. during the morning, i visited the university and spoke about how the riksbank works. later this afternoon i will first be visiting coffee manufacturer lofbergs lila and thereafter be discussing labour market conditions at the county administrative board. we at the riksbank make these visits in order to meet the swedish people and increase understanding for our policy, something that is particularly important today given our statutory independence. in sweden we have an inflation target, which the riksbank has defined as 2 per cent with a tolerance interval of plus / minus one percentage point. as i see it, our policy of inflation targeting has worked well. we managed to gain respect for our conduct of monetary policy a lot quicker than many other countries. moreover, in the ten years that have passed since the introduction of the new regime, average inflation has been very close to our target. at the same time, growth has been higher than in previous decades. prospective inflation has also been remarkably stable for the past 6 - 7 years despite periods of rather large transitory fluctuations in actual inflation. the stable inflation expectations have been particularly important for wage negotiations, which have been able to proceed against a completely different, more secure background than during the 1970s and 1980s. when we conduct monetary policy, we do so on the basis of forecasts of inflation for primarily the coming 1 - 2 years. the reason we work with this time perspective is that the effects of our actions are exerted mainly during this horizon. when our forecasts indicate that inflation in the relevant time horizon will be above target, there is normally reason to raise the repo rate, and vice versa. particularly when it comes to debate situations such as that we have been involved in recently, it | 0.5 |
own quotas. it was a tough struggle, which should not surprise anyone β after all, global influence was at stake. we are also noticing something similar at present. and not only in the debate on imf governance. another major topic during your tenure at the imf was the euro area sovereign debt crisis. during the acute part of the crisis, the aim was to avert the worst. this is where the imf made an important contribution. and you brought to the table your sizeable economic expertise and your particular skill in in navigating talks with discretion. you injected the bundesbank's views and were an effective proponent of stability. as an advocate for stability and a seasoned economist, you were also held in high regard and were in high demand here in saxony and thuringia. you were president of the bundesbank's regional office and represented the bundesbank in the region for eight years. one of your main concerns was to impart knowledge of central bank issues, which are often not exactly simple, and thus to convey an understanding of current developments. you considered the " forum bundesbank " series and the banking evenings to be formats that lent themselves particularly well to exchanging ideas with the general public and experts from the business and financial world. a total of 90 of these events took place during your tenure, with presentations by our skilled bundesbank staff in leipzig, dresden, erfurt and chemnitz. you chaired the debates in an expert manner and to the benefit of all. and, from time to time, you yourself were the knowledgeable speaker. these offerings were, and are, very popular and well attended. 2 / 7 bis - central bankers'speeches the topic of the " digital euro " has encountered particularly keen interest. i am personally pleased about that. this is because the " digital euro " project will be the central strategic project of the bundesbank and the eurosystem in the coming years. the digital euro would deliver a host of benefits to the public. let me just list three of them here. it would be a european digital means of payment that could be used throughout the euro area. it would provide payers with greater privacy protection than we have seen with other digital means of payment thus far β a point which is all the more important given that the protection of privacy is a key concern voiced by people in surveys on the digital euro. and it would make digital payments in the euro area independent of foreign payment service providers | . there's no need to explain why that's a good thing as far as firm entries are concerned. after all, start - ups are an important building block for economic growth : they nurture fresh ideas and bring them to market maturity. you can get a particularly good sense of this here in leipzig, with its start - up scene. 5 at the same time, innovative newcomers crowd less - profitable firms out of the market. but that has its upsides, too. you see, the people who worked at those firms switch to enterprises with a brighter future. and capital, too, can also flow into more - profitable firms. this is a process that austrian economist joseph schumpeter called " creative destruction ". it is a process that unleashes productivity growth, boosts prosperity, and even leads to greater economic security in the long term. in germany, market entries and exits in 2023 were down by almost one - third β specifically, 30 % β compared with 2004. this sharp decline partly explains why productivity growth is weak and receding in germany. there is another point that backs up this view. these years did not only see a drop in the number of market entries and exits β they also saw a divergence of productivity levels between firms within a given market. in other words, firms trailed ever further behind sector leaders in terms of their productivity. from an economic perspective, this suggests that " declining allocation efficiency " was at play β that is to say, the allocation of production factors trailed increasingly behind levels that would have been needed to achieve optimum productivity. yet the reallocation of labour and capital away from inefficient firms to more efficient ones ranks as a key driver of productivity growth in the economy at large. if we now explore what is behind the decline in market entries, the general ups and downs of economic activity are one factor. firms tend to be established in upturns, while more are closed during downturns. in addition, rising uncertainty can dampen the firm entry rate on a lasting basis. indeed, the market entry rate in germany and the euro area has been conspicuously weak ever since the financial, economic and subsequent sovereign debt crisis. besides these cyclical factors, though, there are also structural constraints. in particular, demographic ageing acts as a drag on business dynamism. a study on the federal state of saxony as a start - up location, for example, 5 / 7 bis - central bankers | 1 |
radovan jelasic : educating consumers of financial services in serbia speech by mr radovan jelasic, governor of the national bank of serbia, on the promotion of the brochure β how to talk to banks β issued by procredit bank, belgrade, 12 october 2007. * * * ladies and gentlemen, the developed world pays special attention to consumer education, particularly in the aftermath of major crises, with the aim of not only ensuring necessary prerequisites for economically feasible decision - making, but also with a view to strengthening confidence of the general public in the banking system. worldwide practice shows that that there can be no efficient financial sector unless consumers of financial services are sufficiently knowledgeable in their use. in the long last, it is the level of public trust that both profits and long - term positioning of financial institutions in a particular market depend upon. for this particular reason, financial institutions should be aware that it is in their best medium - and long - term interest to make the information about their products transparent, accessible and formulated in a language that can be easily comprehended by the general public. this line of reasoning is particularly important in serbia since our citizens were deprived for quite some time of more sophisticated commercial bank services, as they were reduced to the most fundamental ones in the course of the past decade and a half. amid a tide of countless marketing campaigns and fast expansion of financial services, the national bank of serbia recognized on time the need to provide the citizens with fair and objective information on all aspects of the use of money! hence, our first step was to set up a free - of - charge call centre in october 2005. however, we soon became aware of the need to broaden education of the public in a systematic and well organized fashion, and ultimately decided to set up of a centre for financial services consumer protection and market supervision in early 2007. the purpose of this centre is to spread information and improve education of users of financial services, as well as to increase transparency of terms under which such services are offered. the centre has so far prepared and published a number of leaflets and brochures aiming to draw attention of citizens to the particular features of financial products they should pay special attention to when making decision on the purchase of a financial product. the centre aims not to decide for the client, but to help the bank customers make informed decisions. the ultimate goal of the national bank of serbia is to encourage banks to invest more in client education and to further improve | ( by 4. 8 per cent, against 2. 2 ) and a slower recovery in 2021 ( 7. 5 versus 10. 1 per cent ). the exceptional support provided to us households is particularly evident when comparing the dynamics of gdp and disposable income ( fig. 2 ) : in 2020, just as the former recorded its sharpest collapse in real terms in the entire post - world war ii period ( - 3. 4 per cent ), real disposable personal income grew by over 6 per cent, its largest rise since the mid - 1980s. in the euro area, instead, household real disposable income declined, even though by a smaller extent than gdp ( - 0. 6 versus - 6. 4 per cent ). second, the different dynamics of household disposable income across the two economic areas translated into very diverse effects on demand. in the us, gdp returned to its pre β crisis trend at the end of 2021, but aggregate data hid an elevated degree of heterogeneity between sectors : while demand in the service sector was restrained by pandemic - related factors, the goods sector increasingly showed signs of overheating ( fig. 3 ). in the spring of 2021, for example, personal consumption expenditure in the durable goods sector was already more than 30 per cent higher than its pre - crisis level. the fast recovery in us demand, in a phase in which supply elsewhere was still constrained due to the pandemic waves, caused bottlenecks in the global value chains to drove up the prices of intermediate goods everywhere. in the euro area, demand for both goods and services remained below pre - pandemic trends up until the end of 2021. third, the labour market appears to be much tighter in the united states than in the euro area. the us unemployment rate still stands at just 3. 4 per cent, a value last seen only in the late 1960s and about half the level of the euro area ( 6. 6 per cent ). more importantly, the difference between the number of vacancies in the us non - farm sector and the number of people who are unemployed is, today, over 5 million, i. e. there are many more jobs available than there are people looking for them, while in the euro area the opposite is true, with the number of unemployed exceeding the number of job vacancies by about 6 million. unsurprisingly, the annual change of us nominal wages | 0 |
between two types of situation : the first is where inflation has been comfortably averaging 2 point something per cent for some time and the economy is performing roughly in line with its potential so there is no obvious upward or downward pressure on the inflation rate. the second is where the starting point is either above or below the range we expect inflation to average. in the first case, where inflation is where we want it, monetary policy would be set to keep it there. the economy would be in a type of dynamic equilibrium and there would be no need for policy action. we then ask ourselves what are the circumstances under which we would wish to change monetary policy. would we do it if our forecast for inflation rose from 2Β½ % to 2ΒΎ % or fell to 2ΒΌ %? my answer is that we do not worry about small variations in inflation of that magnitude. to trigger a change in policy would require a forecast which had inflation going clearly above 3 % or below 2 % and likely to stay there for a while. our flexible inflation targeting framework does not aim for rigorous fine tuning, and requires a significant variation in the inflation forecast to trigger monetary policy action. this brings me to the second type of situation. this is where we start from a position where inflation is above or below our desired target range. in this case, where the initial situation is one of dynamic disequilibrium, the prescription is a little more complex. let us look at the situations defined by the two possible starting points. β’ the first is when inflation is above the target. in this situation, the inflation targeting framework would say to raise interest rates to a setting which would bring inflation back to the target. but once the higher rates had done their job, they should be gradually reduced to more normal levels. this is what happened in 1996. we did not wait until our forecast had inflation falling below 2 % before we started to ease. β’ the second is when inflation is below the target. in this case, the framework would first call for a setting of interest rates which would, over time, allow inflation to go back up to the target. once it is clear that such a setting had done its job, the framework calls for it to be replaced by one more likely to keep inflation at the target. the framework does not envisage the low interest rate setting being maintained until something goes wrong. it is this reasoning which lies behind the recent tightening of monetary policy and why we refer to it as pre - emptive. | philip lowe : remarks - launch of asic's national financial capability strategy 2018 remarks by mr philip lowe, governor of the reserve bank of australia, at the breakfast event to launch asic's national financial capability strategy 2018, canberra, 21 august 2018. * * * i am very pleased to be here to participate in the launch of the national financial capability strategy. all of us have to make choices about money every day. do i spend, or save? if i spend, what do i buy and how do i pay for it? if i save, where should i invest ; how much risk should i take? if i borrow, how much should i borrow and how quickly should i pay it back? in many ways these choices have become more complicated over time. we have more options than ever before β which is good β but these options can be bewildering. it is fair to say that many people find it hard to navigate their way through the myriad of possibilities out there. but we all do need to find a way to navigate through these choices. we all need to plan. for our own sake, and that of our families, we need to do this as well as we can. if we go in the wrong direction, it can have a major effect on our families and our welfare, perhaps for years. so it is really important we make well - informed financial decisions. and, we can all do with a bit of help to make sure we are going in the right direction. the strategy that is being launched today can provide that help by providing education, information and support for australians as they manage and make decisions about their money, and plan and save for the future. i would like to congratulate the government and asic for the work they have done in putting this strategy together. at the reserve bank of australia, we are also trying to play our part. as australia β s central bank, the rba has a very strong interest in people being in control of their financial lives and making well - informed choices. i say this from the perspective of the individual and the economy as a whole. at the individual level, each of us will be better placed in our lives if we make good financial choices. and at the collective level, the financial choices that the 25 million of us make about how much we spend, save and borrow can have a major bearing on the health of the overall economy. if enough of us make risky or bad choices, the whole | 0.5 |
that, if there is no increase in global demand to offset the expected increase in desired savings, it may be difficult for monetary policy to effectively fulfill its role as the main short - run economic stabilizer in the years ahead. so, what should policy - makers be doing now to help us avoid a keynesian deflationary gap in the future? as it turns out, most of the policy prescriptions that i spoke about earlier in the context of the resolution of today's imbalances would also address potential problems further ahead. let me now return to those policies and talk about them in a bit more detail. first, one might look to governments to provide an expansionary fiscal policy. in a few economies, there is clearly room for fiscal policy to become more stimulative in order to boost investment and demand. certainly, the economies of emerging asia have the scope to support demand with fiscal policy. but in north america, europe, and japan the scope for fiscal policy to spur demand appears to be very limited, given current debt levels in most of these countries and the increasing demands that aging populations will place on the government sector. the strain on the public purse to meet the needs of our aging populations will be enormous. the situation will be more serious in those countries that have not yet taken steps to ensure that their public pension systems will be able to handle the retirement of the baby - boom generation. unless the ratios of public debt - to - gdp are reduced before this strain is felt, governments in many countries will face the difficult task of reducing services or raising taxes, or both. in any event, public debt in some countries may have already become so large that additional fiscal stimulus might actually be counterproductive. households, anxious about future tax liabilities or the viability of public pensions, might cut back on consumption. this could offset the positive effects of the easier policy stance. but if there is any scope at all for effective fiscal action, i would argue that the emphasis should be on improving the economic infrastructure in a way that can support the production capacity of the economy while, at the same time, helping to meet rising social needs as the working population begins to decline. this might include additional money for education and training, which by adding to human capital, would help maintain the production capacity of the world economy. but if there is one thing that all governments can do to stimulate demand, it is to have appropriate structural policies, and i stress the word " appropriate. " structural | financial system in india is dominated by banks and so is the case in goa. in fact, goa leads in terms of development of banking in india. over time, the number of commercial bank branches in goa increased steadily from only 5 in 1962 to 459 by endjune 2011. there is a state cooperative bank and 7 urban cooperative banks with 136 branches. with a ratio of 3, 180 populations per commercial bank branch as against allindia average of 13, 270, goa has one of the best banking services in the country. the sectoral flow of credit reflects the structure of the economy and the demographics. the industrial sector accounted for the highest share in credit followed by personal loans and services. the industrial sector receives maximum credit reflecting continuing industrialization. goa, being one of the prime tourist destinations, the hospitality sector led services sector in attracting credit. the high per capita income level of the population reflecting greater borrowing capacity explains a high share of personal loans in the overall credit. however, credit flow to agriculture remained low, though 50 per cent of the population was still rural ( chart 2 ). bis central bankers β speeches while the share of agriculture in nsdp has reduced sharply over the years, goa is also known for its distinct agricultural products such as mangoes, cashew and grapes. a fading agriculture sector may not be a sustainable feature for balanced growth in a long - term perspective. therefore, concerted efforts need to be made to promote agriculture in the state. this also requires sustained credit flow to agriculture. the state government has made provision for subsidized farm loans and subsidy for acquisition of agricultural implements. this will also help increase the level of credit - deposit ( cd ) ratio in the state which is relatively low as compared with the all - india level. the c - d ratio of the state of around 30 per cent compared with about 75 per cent at the allindia level does not appear commensurate with its high level of economic development ( chart 3 ). the recorded c - d ratio, however, understates the extent of credit penetration for mainly three reasons. first, major industries such as pharmaceuticals and hotels source credit from their head office locations which are outside the state. hence, such credit flow does not reflect in the c - d ratio of the state. second, internal cash generation in industries such as tourism and iron - ore reduces institutional finance. third, with a substantial share of non - resident deposits, the deposit base is large which imparts | 0 |
closing window β released in october 2022 3 have once again brought to fore global attention on the measures required and the need for urgent action. the hierarchy of actions and the agencies responsible for the same is getting crystallised while there is a greater degree of agreement on the manner in which to proceed further starting from taking effective steps for reducing carbon emissions, to fostering sustainable patterns of production and consumption and transitioning to a sustainable lifestyle in a cleaner and greener earth. it is also clear that there is no room for differences on the issue and only our collective efforts can address the challenge of climate change. 4. having said that, the question that emerges is what would be the role of different institutions in achieving these objectives? while the overarching policy approach would be guided by sovereign efforts and coordinated by decision - making bodies such as the cop, the financial world needs to ask the obvious question to itself - how can we help? as custodians of financial stability, central banks and policymakers would also be required to evaluate and examine the instruments or strategies they should leverage or focus upon to meet sustainability goals without compromising on their existing policy mandates. these are some of the dilemmas that i would like to highlight today in my remarks. 5. given its wide ranging economic and financial implications, climate - related financial risks are already engaging the attention of international standard setting bodies, central banks, and supervisors globally with the focus on the need to promote the transition to a sustainable global economy. the reserve bank too had come out with a discussion paper 4 on climate risk and sustainable finance earlier this year. besides, rbi had also undertaken a survey on climate risk and sustainable finance among 3 the report can be accessed at https : / / www. unep. org / resources / emissions - gap - report - 2022 4 reserve bank of india - press releases ( rbi. org. in ) leading scheduled commercial banks. there is a general consensus that banks and financial institutions will play a key role in financing the transition to a low - carbon economy and supporting the national climate commitments. 6. while no entity is immune from climate risks, we in india are particularly vulnerable to the climate change related physical risks 5 and hence there is a need to be more alive to the urgency of action6 given our long coastline, high share of fossil fuels in energy systems, and relatively high dependence of rural livelihoods on agriculture. climate trends and events have a direct bearing on the economy and resultantly have an impact on | average rate. business confidence has sunk, the previous reduction in unemployment has come to a halt. the euro - area economy has been hit particularly hard by the oil and food crises. both led to sharp price increases and put the consumer into a state of uncertainty. the oil price shock caused a negative terms - of - trade effect and major reductions in real disposable income. at this juncture, we see the economy of the euro area having lost momentum, after the vigorous expansion in the year 2000. there are, however, several reasons for feeling confident. the waning food crises will no longer weigh on consumption and this year β s tax cuts are to come into effect in some euro - area countries. the risks are clearly on the investment side. a major part of the reduction in gdp growth during the first quarter - the latest data available - occurred owing to a lower contribution of gross fixed capital formation. capacity utilisation is still high, and the global outlook does not call for stepping up investment. on the whole, business sentiment, and thus the propensity to invest, hinge on a more optimistic view of the world economy. financing conditions, however, are favourable in the euro area. capital markets rates are about the same level as rates in the us. in an environment of weakening growth the continuation of the consolidation of the public sector β s finances is becoming more difficult. in 1997, the european governments decided to implement the stability and growth pact. they agreed to pursue a policy of eliminating structural deficits. in most euro area countries, this process is well advanced. these countries are in a somewhat favourable position, as they have enough room to manoeuvre to let automatic stabilisers work in full. a minority of countries ( germany, italy, france and portugal ) - which, however, account for 70 per cent of euro area gdp - still show structural deficits of a considerable extent. under the present circumstances, therefore, the automatic stabilisers should only be allowed to work fully in those countries whose budget positions are close to balance or in surplus. recently, suggestions have been aired to replace targets for the public sector deficit with targets for public expenditure. i am strongly in favour to stick to the tried and tested deficit target. the public sector deficit is the decisive measure for its demands on the financial markets. the deficit is the benchmark for a government β s stability - orientation. last thursday, the governing council of the ecb decided to lower its key | 0 |
at the same time, risks to domestic price and cost developments are contained. overall, we need to monitor closely the future evolution of all available price indicators. turning to the monetary analysis, the annual growth rate of m3 remained slightly negative, at β 0. 1 %, in march 2010. together with the continued negative annual growth in loans to the private sector β β 0. 2 % in march β the latest data further support the assessment that the underlying pace of monetary expansion is moderate and that the inflationary pressures over the medium term are contained. shorter - term developments in m3 and loans have also remained muted. the actual growth in m3 is seen as weaker than the underlying pace of monetary expansion, as the rather steep yield curve continues to foster the allocation of funds into longer - term deposits and securities outside m3. at the same time, the still narrow spreads between the interest rates paid on different m3 instruments imply low opportunity costs of allocating funds to overnight deposits rather than other m3 instruments. this is reflected in the continued marked difference between weak annual growth in m3 and strong annual growth in m1, which was 10. 9 % in march. however, with the current interest rate constellation already in place for some time, the latest data suggest that the large shifts in the allocations of funds are waning. the annual growth of bank loans to the private sector remained negative in march, but this conceals a further positive monthly flow. it also conceals ongoing opposite developments at the sectoral level, with positive, increasing annual growth in loans to households on the one side, and negative annual growth in loans to non - financial corporations on the other side. while the lagged response of loans to non - financial corporations to economic activity is a normal feature of the business cycle, the data over the past few months point to a possible discontinuation of the earlier downward trend in annual loan growth. the latest data also confirm that the reduction in the size of banks β overall balance sheets has not continued since the turn of the year. however, further adjustments cannot be ruled out and the challenge remains for banks to expand the availability of credit to the non - financial sector when demand picks up. to address this challenge, banks should turn to the market and use present funding conditions to strengthen further their capital bases. to sum up, the current key ecb interest rates remain appropriate. taking into account all new information since our meeting on 8 april 2010, we expect price developments to remain moderate over the policy - relevant horizon | improved training schemes and sufficient flexibility in labour contracts are required in order to avoid an increase in structural unemployment. at the same time, existing competitiveness problems, as well as domestic and external imbalances, need to be urgently addressed by the countries concerned. to that end, wage - bargaining institutions that allow wages to adjust appropriately to losses in competitiveness and the unemployment situation are indispensable. likewise, measures that increase price flexibility and non - price competitiveness are essential. finally, an appropriate restructuring of the banking sector should play an important role. sound balance sheets, effective risk management and transparent, robust business models are key to strengthening banks β resilience to shocks and to ensuring adequate access to finance, thereby laying the foundations for sustainable growth and financial stability. we are now at your disposal for questions. | 1 |
its impact on domestic and overseas economies continue to warrant attention. in addition, there are extremely high uncertainties over how the situation surrounding ukraine will affect japan β s economic activity and prices, mainly through developments in global financial and capital markets, commodity prices, and overseas economies. japan β s financial system has maintained stability on the whole, despite the pandemic. regarding financial risks from a longer - term perspective, there is a possibility that prolonged downward pressure on financial institutions β profits may lead to a gradual pullback in financial intermediation. meanwhile, the vulnerability of the financial system could increase, mainly due to the search for yield behavior. although these risks are judged as not significant at this point, it is necessary to pay close attention to future developments. ii. conduct of monetary policy next, i will explain the bank β s conduct of monetary policy. 1 / 2 bis central bankers'speeches japan β s gdp has remained below the pre - pandemic level. although the year - on - year rate of change in the cpi is likely to increase clearly in positive territory in the short run, this is expected to occur mainly due to an increase in energy prices. inflation resulting from higher import costs could push down japan β s economy through a decline in households β real income and deterioration in corporate profits. given such developments in economic activity and prices, the bank will persistently continue with the current powerful monetary easing centered on yield curve control, aiming to firmly support japan β s economic activity, which is on its way to recovery from the pandemic, and thereby achieve the price stability target of 2 percent in a sustainable and stable manner. on this basis, while closely monitoring developments at home and abroad, the bank will continue to ensure stability in financial markets through, for example, providing ample liquidity ; it will also continue to do its utmost to support financing, mainly of small and medium - sized firms, by providing funds through the special funds - supplying operations to facilitate financing in response to the novel coronavirus ( covid - 19 ) at a low interest rate to financial institutions that make loans in response to covid - 19. thank you. 2 / 2 bis central bankers'speeches | bank of japan β s december report of recent economic and financial developments1 bank of japan, communication, 18 december 2000. * * * the bank β s view2 japan β s economy continues to recover gradually, albeit at a somewhat slower pace due to decelerating export growth. with regard to exogenous demand, public investment is decreasing gradually since the implementation of the supplementary budget for fiscal 1999 has peaked out. net exports ( real exports minus real imports ), which had been increasing, are starting to level off as inventories of some raw materials and electronics parts became somewhat excessive in east asian economies. as regards domestic private demand, business fixed investment is on an increasing trend. the recovery in private consumption continues to be weak as a whole through lack of notable improvements in employment and income conditions, although there are somewhat positive signs in some indicators. housing investment is declining slightly. reflecting such developments in final demand, industrial production remains on a rising trend although the pace is somewhat slowing. corporate profits continue to improve, and the number of firms that take positive action, such as increasing the amount of fixed investment, is rising, especially in high - growth sectors. income conditions of households still remain severe, but regular and overtime payments as well as new job offers continue to increase in line with the recovery in corporate activities, and compensation of employees has stopped decreasing. as for the outlook, public investment is expected to maintain the current level for the time being, but is likely to start increasing again in the future along with the implementation of the new economic stimulus package by the government. while the u. s. economy is decelerating gradually, the expansion in overseas economies is projected to continue, albeit at a slower pace. in these circumstances, exports are likely to remain level for the time being mainly due to inventory adjustments in east asian economies. meanwhile, imports are projected to continue increasing, particularly for those of consumer goods, and capital goods and parts. therefore, net exports will decline slightly for a while. in the corporate sector, firms still strongly feel that they have excess equipment and that they should reduce their debts to restore financial soundness. however, it is very likely that fixed investment in high - growth sectors, including those related with information technology services, will increase as corporate profits continue to recover. moreover, an improvement in corporate profits will increase household income and this in turn is expected to boost private consumption. however, the pace of recovery in household income will be modest for the time being, since firms β | 0.5 |
to pure winds. β today, the bank of mauritius has become accustomed to the distortions of political speak. people who wear victimhood as a badge of courage get lots of attention. there are interpersonal and sociological components to this that run very deep in our society. perhaps our society merits ecclesiastical review by common sense. three of the five banks whose banking licences the bank of mauritius has revoked in its history have a common thread that runs through to their demise. like a piece of an indian classical bis central bankers β speeches raga, a theme plays throughout in different variations, tempos and pitch. in small, heavily politicized, clan - based societies, relations between politics, banking and business tend to become too cozy, not to say incestuous. the politically well - connected ceos or the politically well - connected biggest shareholders have had a domineering influence in their respective banks. they found it difficult to imagine that anything bad could happen β a phenomenon known as β disaster myopia β β which makes them develop an infallible instinct to self - destroy and ruin their own banks. another striking feature of the three defunct banks under reference is specific management weakness, particularly in the lending area, a frequent initial cause of financial distress known even to the most stupid external auditor of banks. by the way, external auditors generally have the right nose. tragedy! they pretend to have sniffing deficiency. bad lending practices, often motivated by considerations other than normal, opened the door to credit weaknesses and left the banks vulnerable to adverse economic cycles. one of our latest discoveries was massive lending to sister companies having fantasy science fiction balance sheets or no balance sheet at all. the tantalized regulator wondered whether he or she should believe in astrologists or physicists in astronomy. non - performing loans and associated problems accumulated rapidly. the attitude and behaviour of top management permeated middle management and other organizational layers. a bad management culture is very difficult to change. the change for the better may take as long as the change for the worse. the regulator finds himself in an impossible position. from technical mismanagement, the defunct banks shifted to cosmetic management and then to desperate management. and finally, to fraud. it β s a sobering reminder of man β s capacity for folly. ladies and gentlemen, this year a distressed insurance group involved in shadow banking fell tragically. at least rs25 billion, that is, as big as 6 per cent of our 2014 gdp, passed through the | information on activity in the third quarter β coming from various confidence surveys and indicatorbased estimates β continues to support the assessment that economic activity will grow robustly while possibly moderating somewhat. looking ahead to the remainder of 2006 and 2007, the conditions remain in place for the euro area economy to grow at solid rates around potential, with some volatility in the quarterly growth rates likely to emerge around the turn of the year. global economic activity has become more balanced across regions and is still robust, thereby providing ongoing support for euro area exports. investment is expected to remain strong, benefiting from an extended period of very favourable financing conditions, balance sheet restructuring, accumulated and ongoing strong earnings, and gains in business efficiency. consumption growth in the euro area should also strengthen further over time, in line with developments in real disposable income, as employment conditions continue to improve. risks to the outlook for economic growth are broadly balanced over the shorter term, although the recent fall in oil prices β if it were to prove lasting β has the potential to lead to somewhat stronger demand and output growth than embodied in our baseline scenario for activity in the coming quarters. over the longer term, risks to growth lie on balance on the downside, and relate mainly to the possibility of a renewed increase in oil prices, fears of a rise in protectionist pressures, especially after the suspension of the doha round of trade talks, and possible disorderly developments owing to global imbalances. as regards price developments, according to eurostat β s flash estimate, annual hicp inflation fell to 1. 8 % in september 2006, from 2. 3 % in august. although no detailed breakdown is available as yet, this relatively sharp decline seems to be the combined result of favourable base effects, given in particular the strong rise in oil prices a year ago, and the recent significant fall in oil prices. while the outlook for energy prices is uncertain, on the basis of current energy prices and the higher quotations on futures markets, overall inflation rates are likely to increase again towards the end of the year and in early 2007. as a consequence, we expect a considerable degree of short - term volatility in the annual hicp inflation rate, while the overall inflation rate will remain elevated at levels above 2 % on average in 2006 and is likely to remain so in 2007. in addition, risks to the outlook for price developments remain clearly on the upside. they continue to include a stronger pass - through of past oil price rises into | 0 |
policy. a thorough risk assessment is essential for protecting central banks β own balance sheets. besides, central banks can act as catalysts, linking the eligibility of assets to climate - related reporting. they could consider buying securities only from issuers that do fulfil proper disclosure requirements. tougher reporting requirements could boost the availability of data relevant to climate - related risk assessment. this would help the market to better price in climate risk. 4 conclusion ladies and gentlemen, just like japan, germany and the eu are committed to the goal of climate neutrality by 2050. therefore, markets needs to price in climate risk adequately. here transparency and disclosure are essential. 2 / 3 bis central bankers'speeches climate change cannot and will not wait, which is why we must act now. it is worth our joint effort. 3 / 3 bis central bankers'speeches | sabine mauderer : sustainable finance : political efforts and mature markets needed speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the icma and jsda annual green & social bonds conference, virtual event, 13 november 2020. * * * 1 introduction ladies and gentlemen, i β m delighted to be part of the icma and jsda annual green and social bonds conference today. i really regret not being in tokyo. i am glad to see that japan, germany and the eu forge an alliance to combat climate change. in his first general policy address, japanese prime minister suga announced the goal of becoming climate - neutral by 2050 β like the eu and germany. today, i will focus on two topics : first, the political effort of germany and europe to push sustainable finance. second, what is needed for a mature sustainable financial market. 2 political efforts of germany and europe to push sustainable finance allow me to summarise recent political initiatives in sustainable finance, starting with germany. germany issued a green bond with a 10 - year term for the first time in september, followed by another green bond with a 5 - year term last week. both issues, with a total outstanding volume of β¬ 11. 5 billion, attracted huge interest among investors. looking back at these successful issuances, i can conclude that it was worth entering the market a little later, but with a tailored approach. germany entered the market with the innovative β twin bond β concept meeting market β s liquidity needs : each of these β green bunds β is twinned with a pre - existing conventional bond with identical features in terms of its coupon structure and maturity. the twin bond concept means that the β green premium β is immediately apparent. notably, the yield discount of the 10 - year green bund is around 2 basis points and around 1 basis point for the 5 - year green bobl. looking ahead, the federal government is going to build a β green curve β over the entire maturity range of federal securities from 2 to 30 years. a detailed issuance preview for 2021 will be provided in december. apart from the federal government, there are other public issuers in germany who are already active in the market : at the state level, north rhine - westphalia has issued a number of sustainable bonds with a total volume of β¬ 13. 3 billion, making it the top issuer in this segment. state - owned development banks are also a vehicle which can | 1 |
of an effective aml / cft regime, that is to ensure that the financial system and the broader economy are protected from threats of money laundering and the financing of terrorism, thereby strengthening financial sector integrity that contributes to the safety and security of the country. before i end my speech, let me recap the following key points : i. crimes and money laundering could pose significant threat to our financial system, economy and society ; ii. understanding of risks is key in ensuring that our aml / cft measures are commensurate with the risks, in order for us to protect the financial institutions and the integrity of our financial system ; iii. non - compliances will be viewed very seriously and strong regulatory and supervisory actions are to be expected ; iv. cooperation and collaboration between financial institutions and leas are vital for an effective aml / cft regime ; and v. legal, regulatory and operational frameworks alone are not sufficient without effective execution and overall implementation. results would need to be measured based on the outcome and impact. bis central bankers β speeches in relations to the mutual evaluation that will be undertaken from 13 to 25 november this year, i wish inform that some financial institutions will be called to meet the assessors during the on - site assessment in november. the purpose of the meeting is for the assessors to assess how effective aml / cft measures are being implemented by the reporting institutions. we have identified several potential institutions as per the criteria given by the assessors. if your institution is being selected, you will receive formal notification from us in due course. nevertheless, there are also high possibilities that the assessors may request to meet institutions of their choice during the on - site assessment. on the final note, i would like to once again thank all of you here today for attending this conference and for the moderators and panellists who are willing to share their experiences for the collective benefits of everyone attending the conference today. i would also like to thank the association of banks, malaysia ( abm ), association of islamic banking institutions malaysia ( aibim ), life insurance association of malaysia ( liam ), malaysian investment banking association ( miba ), malaysian takaful association ( mta ) and the securities commission malaysia for coordinating the participation from your members. i wish all of you a successful and productive conference ahead. bis central bankers β speeches | signs of stress, banks should come together and look at the holistic viability of the entity rather than adopt ad hoc β go it alone β solutions β this will avert larger sacrifices at later stage. conclusion 15. the magnitude of the global financial crisis and consequent corrective actions have necessitated changes in the regulatory regime. the changes however, may vary across different countries depending upon the nature and level of sophistication of the respective financial markets. the new global standards are expected to enhance the resilience of the banking sector as a whole, while promoting financial stability in both developed and emes. however, in emes such as india, the challenges of rapid and inclusive growth require the regulator to focus on facilitating financial sector development that is conducive to such growth while not compromising on prudential principles and financial stability. this has also implied evolving the regulatory framework to meet the needs of the productive sectors and in particular, paying specific attention to key areas such as infrastructure financing, agriculture, mse, education and low income housing. thank you. | 0 |
greater detail, starting with the economic analysis. incoming data and survey results suggest that economic activity improved significantly in may and june from its trough in april, alongside the ongoing containment of the virus and the associated easing of the lockdown measures. at the same time, economic indicators remain well below the levels recorded before the pandemic, and the recovery is in its early stages and remains uneven across sectors and jurisdictions. after decreasing by 3. 6 %, quarter on quarter, in the first quarter of 2020, euro area real gdp is expected to have contracted even further overall in the second quarter, broadly in line with the june 2020 eurosystem staff macroeconomic projections. signs of a recovery in consumption have emerged, while there has also been a significant rebound in industrial output. at the same time, subdued labour market conditions and precautionary household saving are weighing on consumer spending. weak business prospects and high uncertainty are dampening investment, while the weakness in the global economy is hampering foreign demand for euro area goods and services. euro area activity is expected to rebound in the third quarter as the containment measures are eased further, supported by favourable financing conditions, an expansionary fiscal stance and a resumption in global activity, although uncertainty about the overall speed and scale of the rebound remains high. in general, the extent of the contraction and the recovery will depend crucially on the duration and effectiveness of the containment measures, the success of policies to mitigate the adverse impact on incomes and employment, and the extent to which supply capacity and domestic demand are permanently affected. overall, the governing council assesses the balance of risks to the euro area growth outlook to remain on the downside. according to eurostat β s flash estimate, euro area annual hicp inflation increased to 0. 3 % in june, from 0. 1 % in may, mainly reflecting less negative energy price inflation. on the basis of current and futures prices for oil and taking into account the temporary reduction in the german vat rate, headline inflation is likely to decline again in the coming months before picking up in early 2021. over the medium term, weaker demand will put downward pressure on inflation, which will be only partially offset by upward pressures related to supply constraints. marketbased indicators of longer - term inflation expectations have continued to increase from the historical lows reached in mid - march, but overall remain at subdued levels. while survey - based indicators of inflation expectations have declined since the start of the pandemic, longer | end of june 2021 and, in any case, until the governing council judges that the coronavirus crisis phase is over. we will reinvest the principal payments from maturing securities purchased under the pepp until at least the end of 2022. in any case, the future roll - off of the pepp portfolio will be managed to avoid interference with the appropriate monetary policy stance. net purchases under our asset purchase programme ( app ) will continue at a monthly pace of β¬20 billion, together with the purchases under the additional β¬120 billion temporary envelope until the end of the year. we continue to expect monthly net asset purchases under the app to run for as long as necessary to reinforce the accommodative impact of our policy rates, and to end shortly before we start raising the key ecb interest rates. we intend to continue reinvesting, in full, the principal payments from maturing securities purchased under the app for an extended period of time past the date when we start raising the key ecb interest rates, and in any case for as long as necessary to maintain favourable liquidity conditions and an ample degree of monetary accommodation. we will also continue to provide ample liquidity through our refinancing operations. in particular, the latest operation in the third series of targeted longer - term refinancing operations ( tltro iii ) 1 / 3 bis central bankers'speeches has registered a very high take - up of funds, supporting bank lending to firms and households. the monetary policy measures that we have taken since early march are providing crucial support to underpin the recovery of the euro area economy and to safeguard medium - term price stability. in particular, they support liquidity and funding conditions in the economy, help to sustain the flow of credit to households and firms, and contribute to maintaining favourable financing conditions for all sectors and jurisdictions. at the same time, in the current environment of elevated uncertainty and significant economic slack, the governing council remains fully committed to doing everything necessary within its mandate to support all citizens of the euro area through this extremely challenging time. this applies first and foremost to our role in ensuring that our monetary policy is transmitted to all parts of the economy and to all jurisdictions in the pursuit of our price stability mandate. the governing council, therefore, continues to stand ready to adjust all of its instruments, as appropriate, to ensure that inflation moves towards its aim in a sustained manner, in line with its commitment to symmetry. let me now explain our assessment in | 1 |
calbank ltd offical opening of new head office building speech delivered by dr. ernest addison governor, the bank of ghana may 22, 2019 your excellency the president of the republic : nana addo dankwa akufo - addo, honourable ministers, the clergy and chiefs, the board chairman and directors of calbank, senior management and staff, distinguished invited guests, ladies and gentlemen, good morning, 1. it gives me great pleasure to be here today for the official launching of this new state - of - the - art head office for calbank limited, and for the opportunity to make a few remarks on this occasion. 2. i am delighted because this commissioning signals what a local indigenous bank can achieve with commitment and hard work by its dedicated workforce. i have no doubt in my mind that this office space has a cutting edge technology that incorporates accessibility, safety and functionality for both staff and customers. 3. mr. chairman, the overall contribution of calbank ltd to the banking industry in ghana is not in doubt. it remains one of the domestically controlled flagship banks with strong performance in asset growth and profitability. starting off as a merchant bank in the 1990 β s and transitioning to a universal bank in 2004, calbank has exhibited strong growth over the years with an increasing number of branches and several atms across the country. 4. mr. chairman, financial services remain crucial in promoting economic growth and reducing poverty. it is in this regard that the bank of ghana has taken some tough decisions to sanitize the financial sector over the past two years. the objective is to position the sector as a major growth driver, to support the much needed economic transformation of ghana. 5. mr. chairman, our banking system is becoming stronger by the day, as the core financial soundness indicators ( fsis ) suggest that the soundness and stability of the banking sector significantly improved in the first quarter of 2019, reflecting gains from the comprehensive set of reforms introduced by the bank of ghana in 2017 and 2018. 6. the solvency position of the sector improved on the back of the recapitalization of the banking sector and orderly resolution of distressed institutions. as a result, the capital adequacy ratio of the banking sector, which deteriorated into the worst category by june 2017, significantly improved to above 20 percent in march 2019. 7. the banking system remains profitable with a first quarter of strong after - tax income of ghΒ’825. 96 million compared with | act, 2004 ( act 663 ), internal audit agency act, 2004 ( act 658 ) and the financial administration act. to reinforce these moves in order to mitigate the incidence of fraud of all sorts, other bills which contain clauses touching on financial fraud are at various stages of becoming law. the key ones are : anti - money laundering bill, electronic transaction bill, computer misuse bill ( to support electronic banking ) and credit reporting bill. mr. chairman, apart from the bog β s collaboration with government in facilitating financial law - making the bog has over the years initiated a number of financial fraud interventions that should be of interest to this forum. there exists a fruitful collaboration between the bog and the law enforcement agencies in financial crime prevention and prosecution. similarly, the banks in ghana have shown invaluable understanding and co - operation with the bog in enforcing the know your customer policy guidelines, in order to weed out suspicious characters from the banking system. above all, the bog β s in - house investigation and consumer reporting office handles public complaints that touch on various matters including alleged financial frauds. i should hasten to add that the bog co - operates with international financial institutions in fighting the cross - boarder aspects of financial fraud. mr. chairman, i am convinced that the most critical tool that can be used to combat financial fraud in our environment is collaboration within constitutional and statutory bounds among all the institutions of the state that have a part to play in the detection, investigation and prosecution of financial frauds in every aspect of our national lives. in the sphere of banking, you would agree with me that the supervisor is the frontline investigator, which solely or in co - operation with the directors of banks complain to the police or serious fraud office for further action, where necessary. by this approach, the letter and spirit of the constitution which created all the investigators will be upheld. mr. chairman, i wish to end on the note that financial fraud has always been and will continue to be a topical issue in the financial world. while i urge investigators to continuously review their investigative procedures to cope with the level of sophistication associated with present - day financial fraud, i recommend that the courts be made part of such seminars in order for us all to benefit from the interdisciplinary discussions that take place. the speedy delivery of justice and decisions of the courts are critical to our effectiveness in combating fraud. i thank you for your attention. | 0.5 |
tiff macklem : opening statement before the house of commons standing committee on finance opening statement by mr tiff macklem, governor of the bank of canada, before the house of commons standing committee on finance, ottawa, ontario, 30 october 2023. * * * good afternoon. i'm pleased to be here with senior deputy governor carolyn rogers to discuss our recent policy announcement and the bank of canada's monetary policy report. last week, we maintained our policy interest rate at 5 %. we held our policy rate steady because monetary policy is working to cool the economy and relieve price pressures, and we want to give it time to do its job. but further easing in inflation is likely to be slow, and inflationary risks have increased. before i take your questions, let me give you some economic and financial context for the decision. since the last time we were here with you, the canadian economy has slowed, and the data suggest demand and supply are now approaching balance. we're now seeing clearer evidence that higher interest rates are moderating spending and relieving price pressures. the economy has entered a period of weaker growth, with growth averaging about 1 % over the last year. growth in gross domestic product ( gdp ) is forecast to remain below 1 % for the next several quarters before picking up in late 2024 and rising to 2Β½ % in 2025. with the economy expected to move into excess supply this year and with growth anticipated to be weak for the next few quarters, we think there's more inflation relief in the pipeline. we expect inflation in canada to ease gradually and return to our 2 % target in 2025. but we're worried that higher energy prices and persistence in underlying inflation are slowing progress. the effects of higher interest rates on inflation are most evident in the prices of durable goods, like furniture and appliances that people often buy on credit. these effects have also spread to many semi - durable goods - a category that includes things like clothing and footwear - as well as many services excluding shelter. inflation in these categories is now running generally at or below 2 %. price increases for groceries, while still elevated at almost 6 %, have also eased and are expected to moderate further. however, a number of factors are getting in the way of low inflation. higher global energy prices are increasing prices at the pump. and that is pushing headline inflation back up. structural supply shortages in our housing market are boosting prices for shelter. in addition, near | . with that summary, i would be pleased to take your questions and begin our discussion. 2 / 2 bis - central bankers'speeches | 1 |
by more than the bank had expected, with more muted price pressures across a wide range of goods and services, consistent with the unexpected increase in excess capacity. bis central bankers β speeches β’ total cpi inflation has also been lower than anticipated, reflecting developments in core inflation and weaker - than - projected gasoline prices. β’ total cpi inflation is expected to remain around 1 per cent in the near term. it is expected to rise gradually, along with core inflation, to the 2 per cent target in the second half of 2014 as the economy returns to full capacity and inflation expectations remain well - anchored. β’ despite the reduction in global tail risks as a result of a series of actions by european and american authorities, the inflation outlook in canada is still subject to significant risks. β’ the three main upside risks to inflation in canada relate to the possibility of stronger - than - expected growth in the u. s. economy, higher canadian exports and renewed momentum in canadian residential investment. β’ the three main downside risks to inflation in canada relate to the european crisis, more protracted weakness in business investment and exports in canada, and the possibility that growth in canadian household spending could be weaker. β’ overall, the bank judges that the risks to the inflation outlook in canada are roughly balanced over the projection period. β’ reflecting all of these factors, the bank today maintained the target for the overnight rate at 1 per cent. β’ while some modest withdrawal of monetary policy stimulus will likely be required over time, consistent with achieving the 2 per cent inflation target, the more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated. with that, tiff and i would be pleased to take your questions. bis central bankers β speeches | mark carney : some current issues in financial reform remarks by mr mark carney, governor of the bank of canada, to the institute of international finance, washington dc, 25 september 2011. * * * thank you for the invitation to speak today. in the hope of addressing some of your concerns, i waded through the more than 1, 000 pages of reports and notes that the institute of international finance ( iif ) has produced over the past year. your messages have been consistent, if not always concise, so i would like to focus on three particular concerns about the financial reform agenda you have recently expressed : 1. the consistency in implementation across jurisdictions ; 2. the possibility of substantial regulatory arbitrage in the shadow banking system ; and 3. the macroeconomic impact of the reforms. before i do, allow me a general observation. the g - 20 is undertaking a radical and comprehensive program to strengthen the regulation, supervision and infrastructure of the global financial system. its ambition can hardly be a surprise. four years ago, manifest deficiencies in capital adequacy, liquidity buffers and risk management led to the collapse of some of the most storied names in finance and triggered the worst financial crisis since the great depression. the complete loss of confidence in private finance β your membership β could only be arrested by the provision of comprehensive backstops by the richest economies in the world. with about $ 4 trillion in output and almost 28 million jobs lost in the ensuing recession, the case for reform was clear then and remains so today. let me now turn to your issues. consistency in implementation authorities are increasingly hearing concerns about the pitch of the playing field for basel iii implementation. everyone is claiming to be a boy scout while accusing others of juvenile delinquency. however, neither merit badges nor detentions will be self - selected but, rather, determined by impartial peer review and mutual oversight. it is important to remember that the basel rules have always been, and continue to be, international minimums, rather than a β one - size - fits - all β approach. there are legitimate reasons why implementation may differ across countries. some countries will implement basel iii faster than others. the current transition period to 2019 for basel iii has been variously described as enlightened, leisurely and generous. it reflects a lowest - common - denominator compromise that gives the time needed to rebuild capital buffers in those crisis economies that are furthest from compliance. some countries may | 0.5 |
lucas papademos : the economic outlook and the ecb β s monetary policy some key issues speech by mr lucas papademos, vice - president of the european central bank, at the nomura annual euro conference β a challenging future for europe β, tokyo, 11 november 2004. * * * introduction the annual euro conference in tokyo, which is now well established, provides a useful forum for examining various policy issues relating to the european economy, also from a global perspective. it is a great pleasure to have the opportunity to address you today and i thank you for the invitation. in my presentation, i would like to focus on two topics : β’ first, the state of, and outlook for, the euro area economy and the current stance of the ecb β s monetary policy. addressing this topic requires me to assess, in particular, the implications of increased oil prices for the euro area economy and the single monetary policy. β’ second, i thought it might be of particular interest to you to also address the challenges posed for monetary policy by large swings in asset prices, especially housing prices. given the japanese experience in the 1990s, it is particularly appropriate to re - examine here in tokyo the impact that large asset price swings can have on macroeconomic stability and the difficult choices for policy - makers confronting strong asset price dynamics. as you all know, these issues are not only of interest for japan ; they are of increasing relevance worldwide. the economic outlook and monetary policy in the euro area i will start by discussing the current state of the euro area economy and the medium - term economic outlook. the performance of the euro area economy this year is characterised by the ongoing recovery of economic activity at a pace somewhat faster than previously envisaged. inflation, however, has remained above ( though relatively close to ) 2 %. this outcome is not in line with our notion of price stability and is higher than the average inflation expected a year ago for 2004. the sharp rise in oil prices since the beginning of this year, by about 60 % ( in us dollar terms ), has been the main reason for the higher than earlier expected inflation. let me elaborate a bit on the pace of the economic recovery, the factors that have contributed so far to the pick - up in growth, and the conditions and basic factors that are expected to influence the mediumterm economic prospects. since the start of the economic recovery in the second half of 2003, we have seen robust growth rates in the first half of 2004, with real | of course, this assumption is made for the purpose of isolating the β pure β impact of the oil price shock. in reality, monetary policy has an important role to play in influencing the effects of oil price shocks on the economy. oil price shocks present policy - makers with difficult choices as they simultaneously pose upside risks to inflation and downside risks to growth. in responding to oil price shocks, it is essential to understand that policy - makers cannot offset the real effects of oil price increases. an oil price increase triggers a loss in the economy β s terms - of - trade and implies a transfer of wealth from oil - importing countries to oil exporters. this change in the terms - of - trade ( in relative prices ) requires an adjustment of the real economy and must be absorbed by markets. the policy - makers β aim should be to facilitate this adjustment by minimising inflationary pressures and aggregate output losses. in reacting to oil price shocks, it is, therefore, important that policy - makers do not repeat the mistakes of the past by attempting to stabilise output growth at unrealistic levels. in the 1970s, such attempts led to a prolonged period of high and costly inflation, rising unemployment and sizeable fiscal deficits. monetary policy should aim to ensure that inflation expectations are not adversely affected by the unavoidable β first - round β direct and indirect effects of an oil price shock on the price level and that they remain anchored to price stability. by preventing oil price shocks from having β second - round β effects on inflation expectations and on wage and price - setting behaviour, monetary policy can contain the unfavourable consequences of these shocks on both inflation and growth. it can prevent the fuelling of an inflationary spiral and the persistence of inflationary pressures, it can facilitate the real economy β s adjustment to the change in relative prices implied by the oil price shock, and it can thus help to minimise the associated output losses. this is why we at the ecb stress the need to be extremely vigilant against the materialisation of second - round effects that may result from a rise in oil prices. the ecb β s commitment to maintaining price stability in the euro area over the medium term implies that it will react promptly if there are indications that second - round effects are likely to emerge. asset prices and monetary policy as has become clear from the previous discussion, monetary policy - makers may face very difficult choices in the event of large swings in important economic | 1 |
daniel k tarullo : regulating large foreign banking organizations speech by mr daniel k tarullo, member of the board of governors of the federal reserve system, at the harvard law school symposium on β building the financial system of the twenty - first century : an agenda for europe and the united states β, armonk, new york, 27 march 2014. * * * the financial crisis exposed, in painful and dramatic fashion, the shortcomings of existing regulatory and supervisory regimes. in both the united states and the european union ( eu ), the crisis also revealed some particular vulnerabilities created by foreign banking operations. this evening i would like to focus on these vulnerabilities and on how best we should address them. let me note at the outset the now commonplace observation that we have a quite integrated international financial system, with many large, globally active firms operating within a system of national government and regulation or, in the case of the eu, a hybrid of regional and national regulation. i add the equally commonplace observation that there is no realistic prospect for having a global banking regulator and, consequently, the responsibility and authority for financial stability will continue to rest with national or regional authorities. 1 the question, then, is how responsibility for oversight of these large firms can be most effectively shared among regulators. this, of course, is the important issue underlying the perennial challenge of home - host supervisory relations. another introductory observation is that β at least in a world of nations with substantially different economic circumstances, different currencies, and banking and capital markets of quite different levels of depth and development β there will be good reason to vary at least some forms of regulation across countries. presumptively, at least, nations should be able to adjust their regulatory systems based on local circumstances and their relative level of risk aversion as it pertains to the potential for financial instability. although the financial systems and economies of the united states and the eu are more similar to one another than they are to those of many other jurisdictions, they are hardly identical. even between these two, for example, there may be legitimate differences within the broader convergence around minimum regulatory and supervisory standards developed at the basel committee, the international organization of securities commissions, the financial stability board, and other forums. these opening observations are important in responding to the curious charge of β balkanization β that has been levelled at the united states and, to a lesser extent, some other jurisdictions, as a result of actions taken | and disclosure, responsible sales and marketing practices as well as investment in financial education have served to better align the interests of financial institutions and consumers, thus reducing the potential for harmful practices. asian economies have also taken steps to strengthen the financial safety net including deposit insurance, while putting in place institutional arrangements for debt counselling and restructuring. these measures can contribute towards pre - empting widespread defaults particularly during periods of stress. second is the continued commitment and sustained progress in the development of strong regulatory and supervisory systems for the financial sector. significant progress has been achieved in asia in this recent decade to strengthen the institutional arrangements and the capacity to safeguard financial stability. this includes putting in place more comprehensive regulatory frameworks, improving supervisory approaches and having clear mandates for central banks and supervisory authorities to deal with system - wide risks. while these measures have yielded tremendous pay offs, efforts have continued to be made to strengthen further the resilience of the financial system. new initiatives are being pursued to enhance surveillance and crisis management tools to enable swift responses to emerging risks and vulnerabilities in the financial system, including those within the traditionally unregulated segments of the financial system. authorities in asia are also continuing to refine and sharpen the efficacy of β macroprudential β instruments to manage excesses and imbalances in the financial system. asia already has considerable experience with these instruments during periods of escalating asset prices and excessive financial market volatility. they therefore already represent an important part of the broader toolkit for managing risks to financial stability. the effort to implement global regulatory reforms is also now underway in asia, with many jurisdictions making significant progress in detailing out rules to implement the basel iii standards. the international reform package aims to significantly raise the resilience of the global banking system and to promote sound risk - taking. the standards will see banks holding larger amounts of capital, including buffers which can be drawn down as losses occur, thus ensuring their continued ability to support lending to the economy even during times of crisis. at the same time, the standards will also require banks to significantly strengthen their liquidity and funding positions in order to support orderly credit intermediation processes. concerns have however been raised about the unintended consequences that may arise from the implementation of these standards β including potential ramifications on the real economy β and therefore the need for the reforms to be bis central bankers β speeches implemented cautiously. this underscores the importance of conducting impact and behavioural studies during | 0 |
mr. george discusses monetary policy, unemployment and economic growth in the united kingdom speech by the governor of the bank of england, mr. e. a. j. george, at the tuc congress in blackpool on 15 / 9 / 98. thank you, chairman. i β m actually very pleased to be here, and to have this opportunity to respond directly to some of the serious concerns that have been expressed recently by trade union leaders - among others - about monetary policy. let me start with what is perhaps your biggest concern. you think that the monetary policy committee, which i chair and which sets interest rates, is only interested in controlling inflation and takes little or no account of the effects of its decisions on real economic activity and jobs. some of you evidently think that β s because we β re a crowd of β pointy - heads β or β inflation nutters β, or even β manufacturing hooligans β - and i β m not sure these descriptions are intended as terms of endearment. more seriously some of you think that the problem lies with our remit from the government which is first, to maintain price stability - defined as an underlying inflation rate of 2Β½ %, and, subject to that, to support the economic policy of the government, including its objectives for growth and employment. whatever the reason, your concern is that we place too much emphasis on holding prices down and not enough on keeping growth and employment up. the implication is that you see a trade - off between inflation and the rate of economic growth, so that if only we β d let up a bit on controlling inflation then this country could enjoy higher activity and lower unemployment, which are the really good things in life - or at least we could avoid some of the worst damage that is currently being inflicted upon the whole of the agriculture, large parts of manufacturing industry and even some services sectors. and that might even be true for a time. the trouble is that, in anything other than the short term, it would be likely to mean more rather than less economic damage, and lower rather than higher growth and employment. often in the past in this country we behaved as if we thought that promoting higher growth and employment - which of course is what we all want to see - was largely a matter of pumping up demand. we paid too little attention to the structural, supply - side, constraints. all too often we tried to buy faster growth and higher employment even at the expense of a bit more inflation. in | effect we tried to squeeze a quart out of a pint pot. and you all know the result - rising inflation and a worsening balance of payments, which eventually could only be brought back under control by pushing up interest rates dramatically and forcing the economy into recession. i don β t need to remind you of the really miserable social as well as economic consequences - as right across the economy people lost their jobs, their businesses and their homes. more insidiously, repeated experience of boom and bust produced a pervasive short - termism in business behaviour which infected both industry and finance and - dare i say both employers and employees - however much we all like to blame everyone else. everyone was tempted to grab what they could while the going was good. but we have learned from that experience. we β ve learned that in anything other than the short term there really is no trade - off between growth and inflation. what we are trying to do now through monetary policy is to keep overall demand in the economy growing continuously broadly in line with the capacity of the economy - as a whole - to meet that demand. both the previous government and the present one set a low inflation target as the immediate objective of monetary policy, not as an end in itself, but in effect as a measure of our success in keeping demand in line with supply. so the real aim is to achieve stability across the economy as a whole in this much wider sense. now, there is not a lot, frankly, that we can do directly through monetary policy to affect the supply side - the underlying rate of growth that can be sustained without causing inflation to rise. that can be influenced by the whole raft of government policies, ranging from education and health to taxation and social security, and it depends ultimately on the ingenuity, the productivity, and the flexibility, of the economy. employers and employees, working together, clearly have a crucial role to play in this context, and i recognise the constructive and forward - looking role that many of you are now playing to improve the supply - side capacity of the economy. monetary policy operates on the demand side. and the best help that we can give is to keep overall demand consistently in line with that supply - side capacity - not letting it run above capacity but not letting it fall below capacity either - as reflected in consistently low inflation. that way we can moderate rather than aggravate the unavoidable ups and downs of the business cycle, enabling steadier growth, high | 1 |
and when to use them. our strategy review also sets out how we can contribute to tackling longer - term challenges that pose threats to price stability, in particular climate change. with this strategy, we are well placed to continue ensuring price stability in this fast - changing world. and that is especially important today in light of the phase of higher inflation we are seeing. we understand that rising prices are a concern for many people, and we take that concern very 1 / 2 bis central bankers'speeches seriously. but people can trust that our commitment to price stability is unwavering, which is critical for the firm anchoring of inflation expectations and for confidence in the currency. the whole governing council is united in pursuit of this goal. at the same time, one of the key strengths of the eurosystem is the way that it brings together different perspectives to form a consensus. our rich quality of debate and diversity of views ensures that our decisions are robust. in this respect, i shall certainly miss my times with jens. he has always been a very articulate voice on the governing council, presenting his views with precision and clarity. and he has embodied the best of the bundesbank tradition of faithfulness to the mandate. alongside the challenges of ensuring price stability, our institutions have cooperated intensively during his term. the bundesbank plays a crucial role in many eurosystem projects, for example acting as one of the three providing central banks of target2, and as a centre of digital financial innovation together with the banque de france. we have enjoyed an exceptionally fruitful working relationship over these past two years. jens, your steadfastness, your intellect, and your loyalty have been crucial to our successful management of the pandemic emergency. i wish you the very best in your next adventure. i now look forward to working closely with joachim in his new adventure as bundesbank president. joachim brings with him a rich expertise crafted by a career that spans the bis, kfw and, of course, 17 years with the bundesbank. so, while this ceremony marks a change of office, it also represents a homecoming for joachim. i am sure i can speak for all of us when i say : β willkommen daheim, lieber joachim! β it is great to have you back in frankfurt and again working to deliver on our mandate for europe. 1 i have recently shared my memories of the introduction of euro banknotes and coins back in january | christine lagarde : welcome address marking the change in office of the president of the deutsche bundesbank welcome address by ms christine lagarde, president of the european central bank, at a virtual ceremony marking the change of office of the president of the bundesbank, 11 january 2022. * * * it is a pleasure to be here today to speak with you. this ceremony marks an important moment of transition for the deutsche bundesbank. we say goodbye to a good friend, jens, after more than ten successful years at the helm of this proud institution. and we welcome joachim as the bundesbank β s new president. the bundesbank is no stranger to moments of transition. it has presided over some remarkable changes in germany β s economy since its establishment back in august 1957. that includes implementing the monetary union as part of german reunification in 1990. overnight, the purchasing power of the deutsche mark could be something enjoyed by all germans. and it also includes introducing germany to the euro. indeed, this month we celebrate the 20th anniversary of euro banknotes and coins becoming part of our daily lives. 1 but amid all these transitions, one element has remained constant throughout. the bundesbank has remained faithful to its mandate of maintaining price stability. this has been the key to the bundesbank β s success β and we have inherited that rich tradition at the ecb. price stability is the north star that has helped us navigate through some extremely turbulent times. we have faced a series of crises in the euro β s short life, ranging from the great financial crisis to the sovereign debt crisis, and to the coronavirus pandemic. we have faced periods of too - high inflation and too - low inflation. but throughout, our actions have been guided by delivering on our mandate. yet the global economy never stands still β and central banks have to adapt if they are to stay faithful to their mandates in changing times. as goethe, a son of frankfurt, once wrote : β life belongs to the living, and whoever lives must be prepared for change. β that is why the conclusion of our strategy review last year was so important. it has given us a policy framework that is fit to tackle new challenges as and when they arise. we now have a 2 % inflation target that is simple and symmetric. we have a playbook for how to react when inflation deviates from our target in both directions. and we have clarity on the tools in our monetary policy toolbox and how | 1 |
and demand uncertainty β, the quarterly journal of economics, 114, 1, pp. 185 - 227, 2019 ; d. altig, j. m. barrero, n. bloom, s. davis, b. meyer and n. parker, β surveying business uncertainty β, journal of econometrics, 231, 1, pp. 282 - 303, 2022. for instance, the interpretation of firms about the ecb β s inflation target, see m. bottone, a. tagliabracci and g. zevi, β inflation expectations and the ecb β s perceived inflation objective : novel evidence from firm - level data β, journal of monetary economics, 129, s15 - s34, 2022. m. bottone, e. mattevi, l. modugno, m. mongardini and a. neri, β indebitamento e liquidita delle imprese nel 2020 : evidenze su microdati di impresa β, ( only in italian ), banca d β italia, covid - 19 notes, 21 december 2021. i. balteanu, m. bottone, a. fernandez - cerezo, d. ioannou, a. kutten, m. mancini and r. morris, β european firms facing geopolitical risk : evidence from recent eurosystem surveys β, voxeu, 18 may 2024 ; l. panon, l. lebastard, m. mancini, a. borin, p. caka, g. cariola, d. essers, e. gentili, a. linarello, t. padellini, f. requena and j. timini, β inputs in distress : geoeconomic fragmentation and firms β sourcing β, banca d β italia, questioni di economia e finanza ( occasional papers ), 861, 2024. however, conducting traditional business surveys based on sound methodologies such as probability sampling is becoming increasingly challenging and costly for central banks. examples of key challenges include the rise in both the item non - response rate β which has tripled to 15 per cent for investment plans since the inception of our invind survey β and the unit non - response rate, especially among firms that perceive a high response burden. 13 moreover, the growing awareness and concerns about data privacy and time constraints14 not only | rizzi and f. zanichelli, β mind the mode : lessons from a web survey on household finances β, banca d β italia, questioni di economia e finanza ( occasional papers ), 437, 2018 ; a. neri and f. zanichelli, β principali risultati dell β indagine straordinaria sulle famiglie italiane nel 2020 β ( only in italian ), banca d β italia, covid - 19 notes, 26 june 2020 ; r. cummings and e. tedeschi, β the effect of online interviews on the university of michigan survey of consumer sentiment β, briefing books, october, 2024. a second way to improve traditional surveys is to use natural language processing and text analysis to quickly extract signals from text. these methods are already widely used in the literature to extract signals on economic variables, such as industrial production from text analysis of survey responses from manufacturing firms, 16 or economic activity from earnings calls, 17 which are an important channel of communication between market participants and the management of publicly traded companies. in light of these experiences, we might further explore the possibility of extracting information from informal interviews with managers that are traditionally more difficult to interpret, moving away from traditional surveys in which respondents read and select the most appropriate answer. third, even in the conduct of more formal interviews, surveys could be facilitated by the use of ai - assisted interviewing, which integrates advanced artificial intelligence into the interviewing process, particularly as a tool to assist interviewers in improving data quality ( minimizing human error and bias ). such a development would enable more dynamic and responsive interviews that adapt in real time to respondents β answers, automating routine tasks, providing a more engaging and personalized interaction, possibly leading to higher response rates and greater satisfaction with participation. fourth, machine learning models could replace current methods for imputing missing data in business surveys, as they are able to capture the complexity in data structures, recognizing non - linear relationships and allowing a large number of predictors to be included. 18 machine learning techniques could also help to detect outliers in surveys, with algorithms that compare responses within the same questionnaire and across waves. last but not least, llms could revolutionize traditional data collection methods. for example, instead of sending out questionnaires, we could provide a programme that firms could adapt to their own databases using llms, allowing them to extract | 1 |
william c dudley : remarks at the cpmi β s 25th anniversary conference remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the committee on payments and market infrastructure β s 25th anniversary conference, bank for international settlements, basel, 30 june 2015. * * * we have three distinguished panelists in this opening session β claudio borio, the head of the monetary and economic department at the bank for international settlements ( bis ), william coen, the secretary general of the basel committee on banking supervision ( bcbs ) and masa kono, who is currently the vice - minister of international affairs at the japan financial services agency and who earlier chaired the international organization of securities commissions ( iosco ) during the development of the principles for financial market infrastructures ( pfmi ). they will offer their thoughts on how the role of the committee on payments and market infrastructure ( cpmi ) has changed and is likely to continue to evolve in its task of setting and helping implement global financial, operational and risk standards for the world β s key financial market infrastructures ( fmi ). before i turn to our panelists, let me offer some brief comments on the evolution of the cpmi. as i see it, there have been three broad complementary trends that have been important in influencing the evolution of the cpmi and have contributed to its increased importance over time. as always, what i have to say represents my own views and not necessarily those of the federal open market committee or the federal reserve system. 1 the first trend has been the development of a global financial system. this has increased financial system interdependencies and, hence, the importance of harmonizing standards across national regulatory regimes. it also has made it more important to avoid regulatory arbitrage and race to the bottom types of behavior that could weaken the resiliency and robustness of the global financial market infrastructure. the second trend is the increasing importance of fmis within the financial system. as trading across a more complex array of instruments and products proliferates, and as more trades are centrally cleared, well - managed fmis play an increasingly important role within the financial system. the third trend stems directly from the first two. with the global financial system becoming more prominent and fmis playing a bigger role within this global financial system, it has become ever more essential that major fmis operate safely. when run well, they mitigate risk. but, run poorly, they | timothy f geithner : the economic dynamics of global integration remarks by mr timothy f geithner, president and chief executive officer of the federal reserve bank of new york, at the forum on global leadership : us competitiveness in a globally integrated economy, washington dc, 25 july 2007. * * * we are meeting at a time of relatively favorable u. s. economic performance, but also of growing concern about our relative position in the world and our longer - term economic prospects at home. on a wide range of measures, the american economy and american business are performing well. we are in the fifth year of expansion in the united states and in the midst of the strongest global economic expansion in more than three decades. corporate profits as a share of gdp are close to the highest level in four decades. corporate balance sheets are healthy. the six - month trailing bond default rate has stayed near zero this year, and the delinquency rate on commercial and industrial loans at banks remains extremely low. we have seen a substantial acceleration in trend productivity growth over the past decade. and although productivity gains have slowed recently, as they typically do as expansions mature, u. s. companies remain at the forefront of changes in science and technology β and in the application of those innovations to business processes across a range of industries. overall, the u. s. economy continues to display remarkable resilience and flexibility, despite a range of adverse shocks. this is a remarkably favorable picture ; and yet there is growing concern about the long - term challenges for the u. s. economy and their implications for future prosperity. in parts of the business community, there is growing anxiety about a perceived shift in the locus of dynamism and growth away from the united states toward asia and other parts of the world. public opinion surveys report increased concern among americans about economic security ; about the prospects for future income growth and economic mobility ; and about the implications of the long - term increase in income inequality. and there we can see growing concern among the general public and in the business community about the struggle to find a political consensus to support reforms to help us meet these challenges. the united states has long been one of the most open of the major economies. this basic policy choice, along with a range of other actions that have made our economy relatively flexible, has allowed us to be a substantial beneficiary of the rapid increase in global economic integration and in the growing economic success of the rest of the world. globalization | 0.5 |
relatively little compensation for risk, thus weakening market discipline ; in addition, creditors will not have much incentive to monitor the firms β risk - taking. as a result, as predicted by principal - agent theory, firms thought to be too big to fail tended to take on more risk, as they faced little pressure from investors and expected to receive assistance if their bets went bad. this problem is an example of what economists refer to as moral hazard. the resulting buildup of risk in too - big - to - fail firms increased the likelihood that a financial crisis would occur and worsened the crisis when it did occur. one response to excessive risk - taking is stronger oversight by regulators, and the recent legislation and the rules and procedures being developed by the federal reserve and other agencies will subject systemically critical firms to tougher regulatory requirements and stricter supervision. the federal reserve has also been involved in international negotiations to raise the capital and liquidity that banks are required to hold. however, the problem of toobig - to - fail can only be eliminated when market participants believe authorities β statements that they will not intervene to prevent failures. if creditors believe that the government will not rescue firms when their bets go bad, then creditors will have more - appropriate incentives to price, monitor, and limit the risk - taking of the firms to which they lend. the best way to achieve such credibility is to create institutional arrangements under which a failure can be allowed to occur without widespread collateral damage ; if failures can take place more safely, the authorities will no longer have an incentive to try to avoid them. the financial reform legislation took an important step in this direction by creating a resolution regime under which large, complex financial firms can be placed in receivership, but which also gives the government the flexibility to take the actions needed to safeguard systemic stability. this new regime should help restore market discipline by putting a greater burden on creditors and counterparties to monitor the risk - taking of large financial firms. the insights of economists proved valuable to policymakers in many other contexts as well : in the setting and oversight of bank capital standards, in the decision to provide the market with extensive information gleaned during the bank stress tests in the spring of 2009, in the design of the fed β s liquidity facilities for nondepository institutions, in the analysis of the collapse of the securitization market, and in the measures taken to protect consumers from deceptive or inappropriate lending, to name a few. many of the key ideas | and effective execution of the plan, the federal reserve provides several different payment services, such as fedwire, ach, check, and cash ; therefore, the banking industry is not totally dependent upon any single system for executing payments. alternatives are available in the event of a disruption in a segment of the electronic payment system. we recognize that despite their best efforts, some depository institutions may experience operating difficulties, either as a result of their own computer problems or those of their customers, counterparties, or others. these problems could be manifested in a number of ways and would not necessarily involve funding shortfalls. nevertheless, the federal reserve is always prepared to provide information to depository institutions on the balances in their accounts with us throughout the day, so that they can identify shortfalls and seek funding in the market. the federal reserve will be prepared to lend in appropriate circumstances and with adequate collateral to depository institutions when market sources of funding are not reasonably available. the terms and conditions of such lending may depend upon the circumstances giving rise to the liquidity shortfall. our preparations for possible liquidity difficulties also extend to the foreign bank branches and agencies in the u. s. that may be adversely affected directly by their own computer systems or through difficulties caused by the linkage and dependence on their parent bank. such circumstances would necessitate coordination with the home country supervisor. moreover, consistent with current policy, foreign central banks will be expected to provide liquidity support to any of their banking organizations that experience a funding shortfall. closing remarks as i indicated at the outset, the federal reserve views its year 2000 preparations with great seriousness. as such, we have placed a high priority on the remediation of date problems in our systems and the development of action plans that will ensure business continuity for the critical financial systems we operate. while we have made significant progress and are on schedule in validating our internal systems and preparing for testing with depository institutions and others using federal reserve services, we must work to ensure that our efforts remain on schedule and that problems are addressed in a timely fashion. in particular, we will be paying special attention to the testing needs of depository institutions and the financial industry and are prepared to adjust our support for them as required by experience. we believe that we are well - positioned to meet our objectives and will remain vigilant throughout the process. as a bank supervisor, the federal reserve will continue to address the industry β s preparedness, monitor progress, and target for | 0.5 |
be the principal creditors in an insolvent liquidation. the technical issue is how to achieve that in a way that minimises disruption and value destruction and enables essential ccp services to be maintained. this is a key agenda item going forward. it will involve achieving greater clarity in the related area of the optimal β waterfall β of margin, default fund and ccp owncapital resources in absorbing losses. 4. margin requirements and macroprudential policy earlier this year, us treasury secretary geithner called for the world β s major financial authorities to agree minimum initial margin requirements for uncleared otc derivative contracts, on the grounds that we must avoid a race to the bottom and incentives that make it attractive to clear bilaterally rather than via a ccp. i agree. but, looking ahead, we must surely establish a system that can extend beyond that β first base β. first, we need policies that extend across markets. if we apply them only to otc contracts, exchange - traded contracts might be subject to different requirements. and if we applied such minima only to, say, futures, we could see the economic substance of futures synthesized via cash repo markets on looser terms. the same applies to other products and markets. generally, we should take care to avoid regimes that give market participants incentives to chose between economically equivalent transactions and post - trade processing on the basis of different margin or haircut requirements. secondly, we have to recognise that economic and financial conditions change β sometimes beyond our wildest dreams β so any minima set for one period may not be at all suitable for see tucker, p m w, β clearing houses as system risk managers β, june 2011. bis central bankers β speeches another. we need, therefore, to be able to vary any such minima as threats to stability evolve ( crudely, cyclically ). you will recognise in this an echo of the plans for varying bank capital requirements. this is all part of an evolving macroprudential toolkit. as a contribution to that, emir should make explicit provision for macroprudential tools. the initial text did not do so, i think mainly because macroprudential thinking has been advancing as the crisis has evolved, but i understand that the parliament β s text does take a step in this direction. it is not too late for europe to lead the world in this area on macroprudential policy generally, by providing a framework for national regimes co - operating with esrb | ##20 mandated ; and, in any case, it would not be in the interests of global stability. related to all this, the eu must ensure that requirements to clear through ccps apply also to exchange - traded derivatives and to vital cash markets, not just to β standardized β otc derivatives. whatever anyone says, there is really no excuse for where things currently stand on this in europe. the mifid ii package provides an opportunity to correct it next year. thanks for comments to andy haldane, edwin schooling - latter, anne wetherilt, graham young and david lawton ( fsa ). bis central bankers β speeches those who argue that the gap in the eu β s framework should persist are serious about private gain but, sadly, not about stability. the crisis that threatens to engulf us all illustrates why we should give no room to such sentiments. 3. ccp default and resolution there is a big gap in the regimes for ccps β what happens if they go bust? i can tell you the simple answer : mayhem. as bad as, conceivably worse than, the failure of large and complex banks2. we therefore need effective resolution regimes for ccps ( and other financial market infrastructure ). the financial stability board will drive this forward as part of our work on the resolution of sifis. ( a comprehensive package on the resolution of banks and dealers will go to the g20 leaders summit shortly. if endorsed, and finance ministers have already given their endorsement, it will become a standard to which countries / jurisdictions pledge to abide. ) the eu β s own work on resolution regimes has been a hugely positive input to this global process. as part of the fsb - led and co - ordinated effort, the central bank committee on payment and settlement systems and iosco are beginning to work on this area of resolution. they must make a clear distinction between measures to procure, on the one hand, recovery from distress and, on the other hand, resolution. orderly resolution is what is needed when a ccp is bankrupt, when we all need somehow to avoid the chaos that follows a standard liquidation of assets and closing out of positions. the issue, always, is where do the losses go? the answer cannot be the taxpayer. in the banking sphere, the answer, broadly, is bond holders and other unsecured, uninsured creditors. in the ccp sphere, it is probably the clearing members, as they would | 1 |
are building up that risk leading to very poor macroeconomic outcomes in the longer run. according to this outline, decision - makers need to balance target attainment in the short and medium term against target attainment in the long term. thus, there are two questions one needs to take a stance on : how does indebtedness affect the risk that shocks will lead to a really severe depression? and to what extent can monetary policy affect indebtedness and thus the risk of this type of scenario? the latter question, in particular, is important in this type of trade - off. unclear benefits but clear costs monetary policy is the most effective tool we have for influencing general price developments. it has an impact through, for instance, credit growth in the economy. monetary policy can therefore be used to dampen credit growth when it appears alarmingly high, even if this does not appear justified on the basis of the prospects for inflation. however, it is not alarmingly high credit growth that is visible in the swedish economy now, but a high level of debt in the household sector that is primarily a consequence of high credit growth prior to the financial crisis ( see figure 3 ). at present, growth in household credit is only slightly higher than growth in disposable incomes. growth in corporate credit is at the same time low. 13 the increase in lending by the major banks over the past five years has consisted almost entirely of swedish mortgages ( see figure 4 ). my assessment is that it does not have any major impact on household debt to hold the repo rate slightly higher for a limited period of time ( see figure 2 ). 14 to have an effect that is more than marginal, one would probably need to hold the repo rate so high that the costs in terms of poorer macroeconomic growth would be very high. so what one gains by monetary policy leaning against the wind in terms of dampening debt, reducing vulnerability in the economy sveriges riksbank ( 2013 ). this is, of course, a simplification. actually, an unfavourable scenario could also occur within the normal forecast period, that is, within the next three years. see also sveriges riksbank ( 2013 ). companies β market borrowing has increased in recent years, which to some extent compensates for the downturn in growth in bank loans. however, even if one takes this market borrowing into account, credit growth in the corporate sector appears relatively low. model estimates of | , was delegated to central banks along with a more independent status and with a clear mandate to hold prices stable. in practice, the riksbank conducted its monetary policy independently from the mid - 1990s, but formally it was not given an independent status until 1999. 4 the instrument of government and the sveriges riksbank act were then amended as part of the adjustment to the requirements in the eu treaty, requirements that were of course affected by the insights gained and by developments in the field of monetary policy. the changes in the regulatory framework meant, for instance, that an executive board was appointed at the riksbank, consisting of six members and with the task of independently conducting monetary policy. at the same time it was confirmed by law that the objective of the riksbank β s operations would be to maintain price stability. the independence thus concerned which interest rate decisions would attain the price stability target in the best way, not what objective the central bank would have for its operations. backstrom ( 2003 ). see backstrom ( 1998 ). bis central bankers β speeches better development with an anchor in place as i mentioned earlier, the inflation target gained credibility relatively quickly and inflation expectations were soon anchored around 2 per cent. the severe weakening of the krona when it was allowed to float also stimulated exports, which made the consolidation of public finances easier in the mid - 1990s and helped the swedish economy to climb out of the deep recession. the new framework for both monetary policy and fiscal policy and more efficient wage - bargaining rounds contributed to the rate of inflation declining and moreover fluctuating much less from year to year in relation to the 1970s and 1980s. the much calmer development of inflation was also supported by more stable inflation abroad. it is important to remember that developments with lower inflation and reduced volatility were not an isolated event in sweden, but an international trend. from the mid1980s there was a period when the fluctuations in many industrial nations β economies were considerably dampened in relation to earlier decades. the reasons for this development, β the great moderation β as it came to be called, have been the object of considerable analysis and debate. it was probably the result of a number of interacting factors. but there are many indications that the changes in the monetary policy field that took place on a broad front during this period were an important reason why inflation began to fluctuate much less. 5 inflation - targeting policy after the crisis as in the early 1990s, the most recent | 1 |
rights. he says explicitly : β every man, as long as he does not violate the laws of justice, is left perfectly free to pursue his own interest his own way, and to bring both his industry and capital into competition with those of any other man, or order of men. β the β invisible hand β therefore cannot function in the total absence of government. indeed, apart from assuring the rule of law, smith saw two other functions for government : β the duty of protecting the society from the violence and invasion of other independent societies β and the β the duty of erecting and maintaining certain public works and certain public institutions, which it can never be for the interest of any individual, or small number of individuals, to erect and maintain β. against the backdrop of these brief reflections on the great adam smith, let me turn back to the specific question put to us. i have no doubt that together with a functioning rule of law and limited government intervention, free markets in general and financial markets in particular are the optimal path to the promotion of wealth. i am equally convinced that responsible behaviour has the best chances of flourishing in an environment of economic opportunities and rising standards of living. trust clearly enhances the rule of law as there will never be enough courts to permanently monitor all market transactions. modern means of communication and transparency, in turn, are trust - enhancing. think of seller and purchaser ratings on many internet auction sites. now, let me conclude my remarks with a final and in my view crucial note of caution. as charles kindleberger demonstrated convincingly in his 1978 book manias, panics and crashes, financial markets are prone to phases of irrationality and exaggeration. such market disequilibria lend support to the need for the rule of law and the utility of limited government intervention in a number of areas. i want to emphasize the word limited. notwithstanding adam smith β s own reference to government intervention, the role of government must remain a limited one. if temporary market imperfections or difficult market adjustment periods give rise to the justification for relentlessly expanding the role of government, there will be a point when markets will no longer function effectively and when welfare creation will seize to advance. there is no better breeding ground for irresponsible behaviour than an environment of economic stagnation or worse, welfare decline. there are times in history when the world economy undergoes fundamental structural change. with the rapid integration into the global economy of china and india, we are experiencing | such historic change. fundamental structural economic change invariably produces economic victims. the temptation for governments to interfere excessively with the free market is therefore particularly acute during periods when dramatic change occurs. paradoxically, it is precisely then that the forces of the β invisible hand β are most needed to help bring about the welfare that can ultimately help absorb the negative externalities of change. if i am right that we are currently traversing such a period of historic change, it is more important than ever to ensure that government intervention in markets is limited and remains subject to continuous checks. free markets under the rule of law, ladies and gentlemen, provide the optimal path to welfare creation and ultimately responsible behaviour by market participants. as the history of the industrial revolution which began shortly after adam smith β s death demonstrates compellingly, there will always be people who endure great difficulties when rapid economic change occurs. chairman greenspan has recently noted that β a significant minority, trapped on the adverse cycle of the market β s process of creative destruction, are suffering. this is an issue that needs to be more fully addressed if globalization is to sustain the public support it requires to make further progress. β perhaps this will indeed be one of the major challenges we will face in the years to come. dealing with it by way of relentless government interference with the forces of the free market will at best fail to produce desirable results. at worst, it will begin to reverse the dramatic welfare gains we have enjoyed since the time of adam smith. | 1 |
been very efficient, yet it should be terminated in due time exactly as an anti - crisis measure. moreover, in our opinion, over the period of its gradual termination, this anti - crisis measure may still be preserved first and foremost in the regions facing a shortage of supply where prices have not risen significantly, since a considerable number of regions have confronted a situation where price growth has already exceeded the positive effect of the mortgage rate reduction. therefore, we consider that this measure should be more targeted in order to really achieve its goal of making housing more affordable for people and avoid overheating in the housing market. as regards ongoing preferential lending programmes, we should have them and did have them before the pandemic. in our opinion, there is a potential for these permanent preferential programmes to be expanded β not for anti - crisis but for permanent ones. they may also be regional, that is, programmes may be supported in those regions where this is not so profitable for construction companies to build these projects and they earn low margins. therefore, it is necessary to select the regions that could have such ongoing measures supporting construction through either mortgage lending or any other mechanisms. the second aspect is social programmes. for instance, we can see that the preferential programme for young families is not highly requested, and the amounts under this programme are not that large. this is why we believe that the criteria for providing support may be expanded in this regard, including for young families in general, while interest rates may be subsidised depending on the number of children in a family. this implies an expanded programme generally for young families, young specialists, as well as rural mortgage β these are the preferential programmes that may be implemented on an ongoing basis. of course, we will be discussing all these issues with the government and the banking community and we also encourage you to express your opinion. for many banks, mortgage lending is a key component of their business models. now, i would like to speak on regulation. while the focus is mostly put on the regulatory easing, 3 / 7 bis central bankers'speeches including temporary relaxations to be curtailed, the decisions we made in 2020 also covered systemic regulatory changes. these systemic regulatory changes have also largely helped banks to release capital. first and foremost, i am talking of the new approaches implemented that have enabled us to reduce the load on capital for low - risk loans, that is, for investment - grade borrowers when new standardised approaches are in place, mortgage loans | further discussions and are ready to elaborate joint approaches. thank you for attention. 7 / 7 bis central bankers'speeches | 1 |
and effective systems. it has also become increasingly important for our settlement systems to have good international links. interdependence of financial and monetary stability the objective of monetary stability - which in norway means exchange rate stability and low inflation - and the objective of financial stability are interdependent. high - and thereby in practice varying inflation and unstable exchange rates can threaten financial stability through several channels. first, it is more difficult to assess the risk of an investment project. inflation makes it difficult to differentiate between a change in prices for a good or service and a change in the overall price level. it makes it more difficult to determine the discount rate to be applied. second, fluctuations in the inflation rate are often accompanied by interest rate variations. a sharp rise in interest rates can also result in substantial losses on financial assets such as bonds and equity. loans that have been granted against collateral in the form of such assets are even more exposed to losses. when rising inflation and inflationary expectations necessitate a tightening of monetary policy a crisis often ensues. in several countries the financial system has been on the verge of collapse during such a period of adjustment. this was the case in the us in the early 1980s and in the nordic countries around 1990. financial stability primarily contributes to price and exchange rate stability by facilitating the use of monetary policy instruments. unstable institutions and markets constrain the use of interest rates because tighter liquidity and higher interest rates may increase the uncertainty concerning the stability of the financial system. asset prices are an important linkage between monetary and financial stability. a surge in property prices with a risk of a subsequent fall threaten to undermine banks β collateral. 5. crisis management analyses of the norwegian banking crisis provide a positive assessment of how the crisis was managed. the imf relies to a large extent on the solutions applied to the banking crises in the nordic countries as a model for its proposals for resolving the current banking crises in asia. the division of banking crisis management into three elements has gained general acceptance in norway. the first element is that the banks β earnings and capital shall serve as the first line of defence. this limits moral hazard. the second line of defence is the collective guarantee system for the banking industry. the third line consists of government resources that will be made available should the collective guarantee schemes fail to resolve the crisis. liquidity support from norges bank is part of the third - line defence. i would like to underscore the importance of the conditions that were attached to | the gain is achieved at the expense of other new zealanders, since in aggregate we are all worse off. to put it bluntly, if the reserve bank is to be able to β look through β the impact of things like the increase in petrol and cigarette prices in implementing monetary policy, we new zealanders also need to β look through β the impact of those things on the cpi. to the extent that we don β t, and instead seek compensation for the impact of those things on the cpi, the bank will need to tighten monetary policy to a greater extent. the only alternative would be permanently higher inflation, and that would help nobody and hurt those least able to protect themselves. in recent years, the reserve bank has been happy to report that inflationary expectations are now well anchored at a low level. we have been able to say that, as a result, we expect that smaller adjustments in interest rates will be required to maintain price stability, and of course this is good news. it would be a tragedy if sloppy thinking by price setters, and a return to an indexation mentality, meant that the benefits of those lower inflationary expectations were lost. the impact of the exchange rate on inflation the second point i want to reiterate is the relevance of the exchange rate to inflation. the exchange rate has two effects on the inflation rate. first, there is the more or less immediate impact of movements in the exchange rate on the prices of goods and services which are traded internationally, or which could be traded internationally. we know, for example, that when the new zealand dollar depreciates the new zealand dollar price of oil goes up, and the price of petrol goes up with it, quite apart from any impact of an increase in the international price of oil measured in us dollars. similarly, the price of milk goes up, even though milk is not imported, because the new zealand dollar price of milk on the international market goes up with the depreciation of the new zealand dollar. these so - called β direct price effects β of a movement in the exchange rate typically affect new zealand β s inflation rate quite quickly, usually within six to 12 months. we used to think that a 1 per cent depreciation in the exchange rate would produce an increase in the inflation rate of about 0. 3 per cent within 12 months as a result of these more or less immediate direct effects. but for some years now, the impact of a change in the exchange rate seems to | 0 |
david notes that it took several decades following the initial development of the electric motor for companies to reorganize their production techniques to use the new invention efficiently. by analogy, david β s argument hints that the largest benefits of computerization may be yet to come. this analogy is intriguing, but counterarguments certainly can be made as well. one reason it took electric power so long to yield benefits is that it took many years for the new technology to gain widespread use, in part because of the huge expenditures required to reconfigure manufacturing plants to use electric power. by contrast, the transition from older office equipment to mainframe computers, and then to desktop machines, often entails much smaller adjustment costs and so has been comparatively rapid. furthermore, it is easy to forget that, while computers account for a large share of investment, they account for only a small share of the overall capital stock, in part reflecting their rapid rate of depreciation. thus, unless computers earn a considerably higher return than other investments that firms might make, the small share imposes some limits on the contribution computers could make to overall productivity growth. so, while we can be hopeful that the recent productivity increases may represent a faster long - term trend, we should not count our chickens too soon. but you certainly can add productivity to the list of items i will be following closely in the period ahead. conclusion with strong output growth, low unemployment, low inflation, and rapid productivity growth, these have certainly been good times to be a central banker. but this does not mean that they are not interesting times, as a glance at the financial pages will drive home. although our economy is basically very strong, we also face near - term and longer - term challenges, and i hope i have given you a sense of some of the issues that will be on my mind as i try to gauge our nation β s economic performance in the period ahead. | bonuses of five to ten percent of base salary, or higher. firms are changing their compensation practices in other ways, too. businesses increasingly are relying less on base wage and salary increases, and are substituting some form of variable pay that is tied directly to performance, such as annual bonuses and profit sharing plans, or even stock options that extend well beyond senior management. these changing labor market practices have implications for the functioning of the economy that are both interesting and, potentially, quite important. for one thing, many targeted bonuses may not be adequately captured by our aggregate wage statistics, so if these bonuses are becoming more prevalent, labor costs may be rising somewhat faster than the published data would indicate. second, these practices may lead to changes in the cyclicality of firms β compensation costs. on the one hand, if firms now are able to use targeted bonuses to certain workers in place of generalized wage increases, this could hold down compensation costs in tight labor markets, thereby making these costs less cyclical. on the other hand, increasing use of variable pay will tend to make compensation more cyclical than it otherwise would have been. under a profit sharing system, for example, firms make larger compensation payments to their employees when times are good than they do when business is slack. if the latter effect were to dominate, and compensation were to become more cyclical, it would raise interesting questions about how this change might affect firms β pricing behavior. to some extent, of course, firms probably smooth through the cyclical ups and downs in their costs when making price decisions in any case. but such smoothing probably is not perfect, and increases in fixed pay probably would exert some upward pressure on prices. increased use of profit - sharing bonuses, however, would presumably lead firms to boost their employees β compensation precisely when they can most afford to do so. and, conversely, when profits are being squeezed, the resulting decline in bonus payments would help ease the firm β s cost pressures. thus, there may be reason to believe that increases in variable compensation payments might not lead to the same price pressures as would increases in fixed compensation payments. in other words, increased cyclicality of compensation gains might not imply any change in the cyclicality of price increases. finally, the spread of variable pay could lead to changes in employment patterns. pay that is more variable is more tied to profitability. as profitability declines, so will compensation, and it is possible that employment may not drop as much as it would in a world in | 1 |
these stark differences across demographic groups in terms of levels of unemployment are also evident in terms of how unemployment changed over business cycles, including the great recession. while the overall unemployment rate increased from 5 percent in december 2007 to 10 percent in october 2009, it increased substantially more for workers with lower earnings. in other words, looking at the national unemployment rate tells only part of the story of the labor market experiences for different groups of individuals. understanding this diversity is critical to better understanding the health of the labor market and the overall economy, and is important for informing policy. now let β s turn to housing. macroeconomists focus on aggregate residential construction as a measure of how the housing sector is contributing to overall economic growth. it is important to note, however, that housing market experiences vary substantially across individuals in ways not reflected in the aggregate construction data. for example, the type of housing units typically occupied by low - income households saw higher - than - average rent inflation from 2009 to 2011. much of this difference appears to be due to contrasting ways that additions to the housing stock enter into different segments of the housing market. for households in the highest income quintile, new construction more than accounts for the net increase in housing bis central bankers β speeches units, which in turn tends to hold down rent increases for these households. however, as one moves down the income distribution, new construction represents a smaller share of the net increase in housing units. for households in the lowest income quintile, additions to rental supply come more from units that with age have depreciated and are no longer rented by higher income households. these supply additions tend to have higher rents than existing units rented by low - income households, thus putting upward pressure on rental costs. the diversity of experiences is also evident with respect to access to mortgage credit, both for households attempting to transition to homeownership and for homeowners who want to trade up. we have also been monitoring mortgage originations at the zip code level using the new york fed β s consumer credit panel. when we rank zip codes by their 2012 average adjusted gross income, we see mortgage origination volume in the lowest quintile locations was 38 percent of the volume for the highest quintile locations in 2007. by early 2015, this ratio had fallen to only 14 percent. as highlighted by these examples, and as you β ll hear during today β s presentation, data at the aggregate level and at a more micro - level illustrate different | william c dudley : beyond the macroeconomy remarks by mr william c dudley, president and chief executive officer of the federal reserve bank of new york, at the economic press briefing, federal reserve bank of new york, new york city, 4 november 2015. * * * aysegul sahin and joseph tracy assisted in preparing these remarks. good afternoon and welcome once again to the federal reserve bank of new york β s economic press briefing. i am pleased to have this opportunity to speak with you. today i want to focus on how economic outcomes often differ substantially across different segments of the population. as always, what i have to say reflects my own views and not necessarily those of the federal open market committee ( fomc ) or the federal reserve system. the federal reserve has a dual mandate of maximum employment and price stability. while these mandates are expressed at an aggregate national level, it is important for policymakers to understand how they impact different groups of individuals across the country. consequently, in addition to monitoring macroeconomic conditions closely on a day - to - day basis, economists at the new york fed have been doing a substantial amount of work to understand how economic experiences differ across individuals and regions. as highlighted by the nobel prize committee β s recent recognition of professor angus deaton β s work, analyzing individual outcomes is vital to fully understanding the workings of the macroeconomy. with that in mind, i want to talk about two important areas that impact household well - being : labor income and housing opportunities. let me start with labor income, which for most households is the dominant source of household income. as one would expect, differences in labor income across individuals of a given age tend to increase as people get older. some of this is due to education and occupation choices β and how they impact income growth β and some is due to various events that individuals face in their working lives. unemployment risk is an example of an adverse development that can substantially affect people β s careers and labor income during their lifetime. over the period from 1976 to 2015, the overall unemployment rate averaged around 6. 5 percent, but unemployment varied substantially across regions and across worker backgrounds. unemployment was especially high for workers with lower earnings, a group that tends to have little savings to draw upon. looking across demographic groups, younger workers, less - educated workers and those in manual occupations, as well as workers who identify as black or hispanic, experienced significantly higher average unemployment rates when compared to older and college - educated workers. | 1 |
, thus increasing china β s public debt ratio, which is now low at 60 % of its gdp. leaving at the top, as the biggest risk, the rebalancing of the economy which, however, will take years and, in my view, markets will have to learn to live with this. 2. 2 oil prices since june 2014, oil prices have declined by more than 70 %, after having stabilised above us $ 100 per barrel for four years and, more generally, after rising almost continuously since early 2000. by january 2016, oil prices traded around us $ 30 per barrel, a level not seen in the past 12 years ( see figure 7 below ). in the context of weak global growth and zero or negative rate monetary policies, lower oil prices are both a fiscal and monetary policy challenge for major economies. while the positive impact on oil importer countries, and especially households and corporates, should materialize in the medium term, the negative impact on oil exporter countries, particularly on fiscal balances and the exchange rates, is more immediate and could be amplified by the energy export dependence for respective countries. bis central bankers β speeches in a monetary policy context, the lower inflation observed in the euro area, for example, driven in part by the oil price decline, could de - anchor inflation expectations from the ecb β s target. furthermore, in the us, the pressure on oil prices and subsequent pass - through to lower inflation levels could impact the economy in such a way as to delay the pace of normalisation of the federal reserve β s monetary policy. it should also be noted that ( like in 1985 ) today β s low oil price is due to a combination of weak global demand and oversupply from oil - producer countries and hence, it is suggested, prices could stay stubbornly low for quite some time. referendum on brexit the uk has entered the final pre - election period for the referendum on britain β s possible exit from the eu ( brexit ), which will take place on 23 june 2016, the outcome of which is very uncertain at this stage. i will say a few more things on the importance of the british referendum for the rest of the eu tomorrow morning in my lecture on europe β s political economy at the event hosted by the singaporean - german chamber of industry and commerce. today, i will limit myself to only one comment. it seems that the weak pound is the only β certainty β across the spectrum of financial markets | other market infrastructure. in brief, persistent negative rates may change expectations and create distortions ( for instance, in terms of saving habits and, in that sense, they may be a topic for behavioural economists to look at ). it is still unknown what their long - term effects will be ( e. g. on the erosion of bank profitability ). in contrast, qe has been tested successfully in the us and the uk and i would also like to remind you that monetary policy β conventional or unconventional β entails considerable time lags. it takes time to see the results at full length. however, there is definitely something positive about negative interest rates : it is a strong reminder that the time has come for other policy tools, including fiscal and structural ones. 2. other global risks 2. 1 china let me now turn to other global risks, starting with a country in this region of the world : china. three are the major risks concerning china, stemming from : a ) its lower growth prospects, b ) significant capital outflows, and c ) rising private debt. china is beginning to rebalance and consolidate its economy. services now account for 51 % of gdp and consumption β s gdp share is rising, while the current account surplus dropped to 2. 7 % from 10 % in 2007. even if you accept the lower expected growth rate for china around 6 % in 2016, trade flows to the rest of the world are not significant and this is in contrast with financial flows. only recently i had been invited to give a personal verdict at an event in london and rank the above three downside risks facing china, namely lower growth prospects, capital outflows ( almost us $ 160 billion exited the economy in december 2015, reaching an aggregate amount of almost us $ 1 trillion in 2015, see above figure 6 ) and private debt ( which accounts for about 210 % of china β s gdp ). i gave the following ranking from bottom to top. at the bottom, i would place capital outflows, since the instrument of capital controls is always available and these days indeed with the blessing of the imf. i would then place in second position the rise in private debt, since only less than 1 % of it is held by foreigners, and it can be easily turned into public debt, if it comes to the worst, and i mean by that, all these stateowned zombie companies which may lose their state guarantees, but whose debt may well be acquired by the government | 1 |
effective financial education is a crucial life skill in order to make financial decisions consistent with personal and family needs. in today β s digital age, financial markets offer everybody easy access to a wide range of financial services and products. but digitalization is two - faced : it can emphasize some behavioral biases, such as short - termism and impatience, but could nudge people into specific virtuous action. the final balance will be positive only if consumers are financially literate. building a sound financial education is complex, as it requires a long - life approach on three challenging dimensions : knowledge, attitude, and behavior. financial education goes beyond than just providing information, it is meant to change those three dimensions, in order for people to achieve their financial well - being. best practices around the world show that experiential learning ( such as games, simulations and role plays ) helps acquire, retain and put in practice new information. since 2008 in our main program for students, β educazione finanziaria a scuola β, we have progressively moved from information to capability, fostering a value - driven approach to economic issues, stimulating the participants β interest by suggesting β i need it because... β. we have been using movies as a trigger for debating financial issues and behavioral biases. we have also introduced contests and prizes. our competition β let β s design a banknote β invites italian primary and secondary school students to design an imaginary banknote on a given theme ; for the current edition, the theme is β money and emotions β. the prize - winning classes receive an amount of money for their school. we will also contribute to the first edition of the italian economic and finance olympiad. adults are more challenging : they tend to acquire just the knowledge and skills they need for a specific purpose and their behavior tend to be well - rooted. furthermore, adults are an extremely heterogeneous population. for example, some immigrants grew up where saving food meant wasting it. thus the concept of saving must be explained to them with a special care. let me also add that ivass is now planning an exercise to measure insurance literacy, a still underexplored dimension of financial capability ; even if it is a novel concept, it could become an international benchmark. i would like to stress that, as international experience shows, single institutions cannot fill all the gaps : a nationally - coordinated approach to financial education is a key factor for success. financial education needs an interdisciplinary approach | allow a more efficient management of risks during the initial stages of the business cycle. on its part, the bank of zambia needs to ensure that there is sustainable stable macroeconomic environment first. but we also need to have a good understanding of the financial innovations that may be needed to attract and disburse investment capital. this is important if we are to ensure that monetary and supervisory policy frameworks are fully supportive of the ability of the financial sector to finance growth and development. zambia today has a large portfolio of large scale industrial and energy projects such as the multi facility economic zones ( mfez ) and several large and small hydro - power projects. these require innovative financial solutions as well as varied sources of finance and expertise, both domestic and foreign. ladies and gentlemen, as you may be aware, the banking sector in zambia has over the last few years, witnessed significant growth in lending. the credit expansion has no doubt brought significant benefits to the economy as resources are channeled through to the lower end of the market. however, most of the credit extended by banks and microfinance institutions is targeted at already established enterprises and individuals in formal employment. only an insignificant amount is extended to start - up initiatives or businesses with potential for growth. in order to bridge this financing gap, it is pertinent to establish financing arrangements such as venture capital funds. venture capital funds are essentially collective investment schemes where investors place their money into a fund with the aim of achieving greater impact and security than could be realised individually. venture capital funds seek to provide finance to enable businesses to start - up, expand or restructure through the use of equity and quasi - equity instruments such as preference shares, convertible debentures, and shareholders loans that reflect the risk and reward in investing in such businesses. furthermore, given the relatively high interest rates prevailing, debt financing is not easily available to start - up and other emerging enterprises because they generally lack the collateral, track record, or earnings required to get loans. to this effect, venture capital funds can be essential to these enterprises as they are a combination of equity and professional know - how. to be attractive investment vehicles, venture capital firms must be able to deliver a rate of return that is more attractive than those available in markets for publicly traded stocks and other securities. mr chairman, in line with the workshop theme, β exploring and creating financial opportunities β, it should be noted that the financial sector in zambia is considered relatively under - developed and has had limited reach to all sectors | 0 |
sum up. the financial sector plays a key role in accelerating the transition to a net - zero economy. this offers long - term opportunities. companies and financial institutions will benefit from transition plans. these need to be credible, accountable and actionable. net - zero transition plans should neither be window dressing nor a boxticking exercise. on the contrary, they should be part of a broader organisational strategy and firms'risk management. after all, it is in companies'self - interest to perform a forward - looking, rigorous and honest assessment. therefore, i encourage you to get on with your own 4 / 5 bis - central bankers'speeches net - zero transition planning. in the same spirit, private and public stakeholders ought to learn from each other and find common ground internationally. the new eu green bond standard is an excellent example of good cooperation. as we all know, the icma is a global pioneer in the field. in this capacity, it has contributed significantly to the creation of european green bonds. by listening to each other and learning from each other, market - based standard setters and regulators can drive progress. let us keep up this spirit and work together for a more sustainable future. 1 https : / / www. imf. org / en / publications / staff - climate - notes / issues / 2022 / 07 / 26 / mobilizing - private - climate - financing - in - emerging - market - and - developing - economies - 520585. 2 https : / / assets. bbhub. io / company / sites / 63 / 2022 / 09 / recommendations - and - guidance - on - financial - institution - net - zero - transition - plans - november - 2022. pdf 3 https : / / assets. bbhub. io / company / sites / 60 / 2021 / 07 / 2021 - metrics _ targets _ guidance - 1. pdf. 4 corporate sustainability reporting directive 5 network for greening the financial system : ngfs scenarios for central banks and supervisors, september 2022. https : / / www. ngfs. net / sites / default / files / medias / documents / ngfs _ climate _ scenarios _ for _ central _ banks _ and _ supervisors _. pdf. pdf. 6 bundesbank calculations, centralised securities database ( csdb ) 7 imf climate finance monitor q1 2023 : https : / / www. imfconnect. org / content / dam / imf / news | sabine mauderer : transition plans β the next step on the path to net zero? speech by dr sabine mauderer, member of the executive board of the deutsche bundesbank, at the annual general meeting of the international capital market association ( icma ), paris, 26 may 2023. * * * check against delivery 1 welcome dear ladies and gentlemen, i am delighted to be here with you today at the palais brongniart. this place was home to the french stock exchange for almost two centuries. the buzz and excitement of the former trading floor can still be felt today. stock exchanges not only produce winners and losers. they also serve a vital role in the functioning of the economy. namely, they provide a marketplace for capital seekers and investors, and maintain the infrastructure for a broad range of investment products. stock exchanges hence also play a vital role in mobilising capital for the transition. indeed, capital needs are high in order to meet the targets under the paris agreement. estimates of the global investments needed to achieve the paris agreement's temperature and adaptation goals range between usd 3 to usd 6 trillion each year through till 2050. 1 spurring investments of this scale requires not only an enabling environment, but also the right regulatory incentives. the eu taxonomy is a starting point, as it provides investors with reference points for their decision - making. nevertheless, the eu taxonomy can be quite complex and currently does not adequately reflect the idea of transition financing. one of the most urgent challenges will be to assist carbon - intensive companies decarbonise. raising financing for businesses that are not yet green and which may never be fully green β that is the hard bit. it is also the focus of my speech today β moving from ambition to action. 2 transition plans in this regard, transition plans can be a powerful tool. they outline the concrete steps that firms are planning to take in order to align their strategic actions with a world that is moving towards net - zero. simply put, a transition plan can help investors to assess whether a company or a project is investable. the same goes for financial institutions, which will be the authors and users of transition plans at the same time. naturally, their own transition plans will only be as good as those of their corporate clients. by means of transition planning, financial institutions can align their business lending with their own transition pathways. 1 / 5 bis - central bankers'speeches the benefits of net - zero transition plans are clear. what is less | 1 |
agencies that are more specifically geared for stimulating and maintaining growth. what we have done so far is endeavour to make credit and funding accessible at reasonable prices, commensurate to the risks agents are willing to take. for the needs of main street, we are in partnership with other government agencies on the capital market agenda. on servicing the unbanked and marginalized, the bsp has 1 ) put together a regulatory environment that has encouraged banks to design suitable financial products, and 2 ) expanded our financial education and enhance consumer protection efforts. innovation, competition, growth β role for finex? putting all three big words together β innovation, competition, growth β there is clear recognition that the government agencies cannot possibly handle the tasks alone. we need the private sector to be our active partner. here is where finex can play a major role. i mentioned at the onset that you are unique in your representation. as such, finex should be called upon to drive growth and competitiveness by pushing innovations that go beyond the bottom line, that consider the bigger picture, that contribute to financial stability. there are many ways by which you can pursue this in your own work. β’ you can avoid the temptation of leveraging finance through carry trades. the pay - offs may look enticing but compounded risk exposures are created in the process which often cannot be unwound without significant loss. bis central bankers β speeches β’ credit underwriting standards need to be kept high. this ensures that credit is allocated based solely on the merits of the prospective economic activity and the counterparty β s ability to pay. β’ binding market conventions and redress mechanisms should be pursued. such conventions set the bar on market conduct which then translate to uniformity in behaviour and practice. other avenues may be considered. when your individual creativities are pooled together under the finex umbrella, the opportunities are limitless. final thoughts i have covered quite a bit of ground this morning. but much of the breadth has been dictated by the call of the times. ladies and gentlemen, the best financial investments today are those that build bigger markets in the future. markets wherein stakeholders are better aware of financial opportunities. markets that are best able to withstand the build - up of system - wide risks. this, in my view, is the unique opportunity that is presented to a unique organization of financial executives. will finex rise to this challenge? thank you and good morning to all of you. bis central bankers β speeches | monetary policy formulation and implementation. to address this, the bsp has had to use a menu of policy actions. we have not limited ourselves to the policy rate. but we have used an enhanced policy tool kit. the kit includes allowing some exchange rate appreciation to account for the structural inflows and macroprudential regulations such as the increased risk weight on ndf transactions. the toolkit also includes a careful build - up of our reserves. reserves are for insurance. but it is not easy to determine an β optimal level β as some have suggested. the risks we are now insuring against are also evolving. that said, our experience in the recent crisis and its aftermath has taught us that it is critical to use the right tools for the job. competitiveness is more than the price moving to the second big term in your theme β competitiveness. the bsp β s contribution to competitiveness is maintaining a stable macroeconomic environment and banking regulatory framework. within these, the market can plan well ahead, consider expansion, innovate and find market - based solutions to address risks. the bsp β s primary mandate is price stability. it β s noteworthy that since 2009, the bsp has been successful at keeping inflation well - within the government β s official target range. and it appears that we would be able to do the same in 2012 and 2013. our forecast for inflation is that over the policy horizon, inflation should be manageable. therefore our current policy stance remains appropriate. in other words, you can expect interest rates to remain low over this period. but we will make adjustments should circumstances warrant, including, among others, in the event tensions in the middle east escalate and more weather - related supply chain disruptions occur. on the external front, the country β s external position is likely to remain robust, which in turn should fundamentally support the peso. our experience has taught us that allowing the market room to determine the exchange rate is equitable and efficient. so far, ( looking at the reer ), the peso has maintained its competitiveness and volatility has just been in line with the region. ladies and gentlemen, the bsp fully appreciates that when finance executives consider the macroeconomic operating environment, your ultimate unit of analysis is the corporate bottom line. you consider every transaction and how it would increase the value of the firm. this is well and good. but the complication arises when these individual β animal spirits β do not behave | 1 |
and guidelines that create a conducive environment for growth of the financial sector, encourage provision of financial services to the majority of the population at affordable cost and enhance the safety and soundness of the financial system. 9. with these few remarks, ladies and gentlemen, it is now my honour and pleasure to declare this workshop officially open and presuppose a fruitful engagement. thank you and god bless you all. bis central bankers β speeches | njuguna ndung β u : review of forex bureau guidelines remarks by prof njuguna ndung β u, governor of the central bank of kenya, at the workshop on the review of forex bureau guidelines, kenya school of monetary studies, nairobi, 24 february 2011. * * * the directors and principal officers of forex bureaus ; distinguished guests ; ladies and gentlemen : 1. it gives me great pleasure to be here today to officially open this consultative workshop that will comprehensively review the forex bureau guidelines. at the outset, i would like to take this early opportunity to express my sincere appreciation to all forex bureaus represented here and to those that took time to study the proposals made and submitted comments on the guidelines. this has allowed the central bank of kenya team to revise them considerably. 2. ladies and gentlemen, forex bureaus were first licensed in january 1995 to foster competition in the foreign exchange market and to narrow the exchange rate spread through this micro - structure of the market. as you are aware, the forex bureau sub sector has experienced rapid growth since it was first established with the number of operating bureaus having increased from 48 in 1998 to 126 as at december 2010. this rapid growth has to do with units in the market and also the volume of their trading. but this has also come with challenges. while the initial objectives have largely been met, it has become necessary to take stock of achievements and challenges so far. 3. ladies and gentlemen : in the last few years, the central bank has carried out comprehensive on - site and off - site review of the operations of forex bureaus. the review exercises have revealed major weaknesses in the operations of some of the bureaus that include ; engaging in unauthorized business activities ; non - compliance with the legal and regulatory requirements such as the central bank of kenya act and the laws that govern taxation ; and limited understanding of regulations and weak capacity in management of the bureaus. it is in light of this that central bank embarked on the process of identifying gaps in the regulatory framework and reviewing the guidelines in order to streamline the sub - sector, facilitate growth and ensure that all the players operate in accordance with the law. 4. the revised guidelines also seek to deal with the various challenges ; strengthen the corporate governance structure and financial position of the bureaus ; enhance competition in the foreign exchange market and more importantly re - define the basic tenets of this market. from the comments and discussions we have | 1 |
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